Q:Hi all,
I am the freeholder over the flat below me. There are 81 years remaining on the lease and the flat owner is planning on selling.
I have been contacted by the prospective buyer, who is trying to hurry things along.
He claims he has a valuation "from an experienced valuer" to extend the lease for ￡3100.
I believe he was just hoping I would listen to him (he had already made the mistake of telling me he works for an estate agent and I'm not an idiot anyway), but I'm sure the lease is worth a lot more money (based on what I've read on the LEASE guidance site and the Lease Calculator).
Anyway, today he called me and said his solicitors would be serving notice under the Leasehold Reform etc Act (1993).
I wondered if someone could clarify for me:
- Is it true then he can exchange and buy the property anytime from now and be able to have the option to renew the lease as if he was the existing owner (or via an option from the existing owner) and not wait the 2 years as normal for a new buyer (by which time there will be a marriage value).
- Is it also true that he has to by law allow me to have my own valuation done for the lease and he has to pay for this valuation?
(I spoke to a valuer and he told me this is the case, but obviously this guy will try and fob me off).
I have passed this information to my solicitor, but he is currently on holiday, so just wanted to make sure I know where I stand.
Also based on the facts, the flat must be worth now at least ￡300,000 and the ground rent is currently ￡125 (but goes up every 10 years to a maximum of ￡300), am I correct in thinking the lease value he should pay is more like at least ￡10,000?
(Or am I reading the calculator output incorrectly).
Thanks and Regards,
hbc
Emphasise to the leaseholder that he will have to pay all your legal costs, this may persuade him to pay a bit more than the going rate to avoid the extra cost/hassle.
Unexpired lease:81 years
Lease extension: Assume 90 by law
Total length of new lease: 171years
Ground rent per annum:£ 125 currently (also increaseses every 10 years to max £300)
Present market value with existing lease:£300000 (at a minimum (I expect its more like £320-330,000), estimated)
Future market value with extended lease:£320000 (again estimated, not sure how you work out increase in value)
Yield:4.75 % (as per LEASE guidance) %
Landlord's share of marriage value: 0% (since > 80 years)
Term: £2,570.24
Reversion at 81 years: £7,458.88
Diminution in the landlord's interest: £9,914.61
Marriage value: £10,085.39
Possible premium: £9,914.61
I used the calculator discussed on this forum: http://www.tenancy-agreements.co.uk/lease.php
Thanks,
Hal.
The leaseholder will have to pay both your valuation and legal fees. This is because you are effectively being forced to sell something against your will.
As for the figures, I would sy 3K to extend an 81 year lease on a 300K flat is probably about right.
It is only when the lease drops below eighty years that marriage value comes into play.