Hello
I am interested in extending our rental flat's lease and am confused regarding the best path moving forward.
It's a little complicated so please bear with me and apologies for the length of this post...
We bought a flat in London in 1999 with 80 years remaining out of the initial 99 years lease on the property. The 99 year lease started in 1980.
At the time I asked our solicitor in writing what the costs of extending the lease would be but I did not want this question to hold up the process of Exchange as the market was a bit crazy. Looking through my letters I never received an answer from the solicitor, nor did I chase it up...
I knew that the costs of lease extension would increase over time but assumed this was a linear function and knew nothing about marriage value.
This year, at 67 years remaining on the lease, prompted by press about lots of leases dipping below the 80 year mark and marriage value; I have investigated the costs of increasing the lease and have been unpleasantly surprised at the cost :)
Out flat is currently worth about 200k and has a yearly ground rent that this year increased from £25 to £50 and will increase to £75 in 2045 I think.
http://www.moneysavingexpert.com/mor...ivTotalResults says I am looking at costs of
£15,000 - £16,000 PLUS solicitor costs
....
Researching the current situation I have found out the following:
Company A is a management company that collects the ground rent on behalf of the freeholder and they say:
"My client is the Freeholder and owns the ground and the outer shell of the building and when it was developed would have owned all of the flats. My client then granted a head lease to Company B for a term of 175 years of all of the flats. This in effect meant that Company B owned all of the flats but would have to give them back to the freeholder after 175 years.
Company B subsequently sold off all of the flats to individual leaseholder for a period of 99 years. This therefore means that after 99 years the flats would return to Company B and they would own them for another 76 years."
Company A initially said to me that they/the freeholder would only accept formal section 42 applications to extend the 99 year lease, as stipulated by The Leasehold Reform Housing and Urban Development Act 1993 by an additional 90 years, to the year 2169, and bring down the ground rent to 0. Their quote would also have an element of negotiated compensation for company B.
They would would not give me a ballpark figure or indications of what they have quoted other leaseholders.....
I got in contact with Company B and they told me that they can extend my lease to the year 2159 (This seems to give them a head lease of 179 years not 175......). Merely 10 years less than the freeholder.
This would cost me £15,000 plus solicitors costs capped at £500 plus VAT.
They said ground rent will not be affected and I believe this is because ground rent goes to the freeholder. I also believe I can't serve a section 42 against Company B as they are not the freeholder.
Now Company A have told me, on hearing that Company B are involved (although I've not told them the quoted costs), that they believe the freeholder would entertain a lower lease extension cost for an increase in ground rent.
This would involve the freeholder negotiating with and compensating Company B above the premium that I would pay the freeholder, and then the freeholder would recoup this loss through the greater ground rents from me.
I guess my main questions are:
1) Do I have any comeback to the solicitor or any other party from what happened at the point of purchase? If the solicitor had told me about marriage value and having to wait 2 years before I could extend my lease I would have done something about it sooner- even maybe asked the previous owner to start the section 42 process on our behalf.... I maybe crying over split milk here?
2) Are The freeholder and Company B is any sort of competing position that could benefit me in terms of cost? Or are there any other reasons why I should deal with one over the other?
My current desire is to negotiate the smallest extension premium through increased ground rent as I'm not sure how I can afford the £15.5k
Any advice and help on these questions and my relative position greatly appreciated and I hope I have my figures and dates correct.
best wishes n99
