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  • Auction Tribe

    Section 42

    Hi Paul, I cannot stress enough the importance of checking the Section 42 and the premium offered but you MUST also ask to see the valuation report on which the premium offer was based. The figure on the Section 42 and the figure on the valuation may not be the same!! This happened to me 2 years ago and it eventually came out that the vendor's solicitor 'misrepresented' the valuer's opinion on what the lease should cost. If all is above board, the auctioneers should not mind you asking to see the valuation report for the new lease. Other than making this vital check, it should be fairly straightforward to extend the lease as the tricky bit is already done i.e. the freeholder has the S42 and has to comply with the timetable set out. I also recommend getting advice from LEASE if you feel the need.

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    If you add together the maximum hammer price you are prepared to pay and the probable cost of the lease extension and it is less than the current market value (with long lease) then you are on to a winner. The other advantage is that you will get the full rental income whilst you negotiate the new lease. I have bought 2 short lease flats and extended both and it was very definitely worth the effort.  Sounds like a probate sale and the vendors may well be facing an inheritance tax bill in which case they will NEED to sell. With any luck the other bidders will be wary and you will snap up a bargain!

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    Thank you to all those who provided advice   I made the decision not to pursue the property in question,  and will instead continue to look at Auction Catalogues in the hope of eventually finding something more suitable to invest in.

    I don’t want to jump at the first thing I find, but that said, there is a danger of always looking and never actually taking any action.

    I’m sure I’ll be back on here at some point in the near future to either ask more questions, or to let people know about any action taken, i.e. perhaps sharing details on an investment made.

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