14:50 PM, 16th January 2017, About 9 years ago 1
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I’m negotiating the purchase of a leasehold flat, and have found that the lease contains a very onerous Ground Rent clause. The Ground Rent is set as a percentage of the flat’s value, and when it’s next assessed (in 14 years’ time) the Ground Rent could be silly money – easily over £2,000pa. The lease itself is nice and long; 96 years.
When I suggested going down the formal Section 42 route the seller responded by saying he will seek to agree a new lease informally instead. What do people think are his chances of getting a new lease sorted that actually solves our problem?
I suspect it’s all a waste of time and that the only real solution is a Section 42 notice, but the seller isn’t yet willing to do that. The current Ground Rent is £700pa, so the premium under Section 42 would be very high, £15,000 or so.
Thanks
Edward
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Member Since June 2013 - Comments: 1121
15:30 PM, 16th January 2017, About 9 years ago
If the seller negotiates a non statutory lease extension it is unlikely to be on less favourable terms than the existing lease. And if you buy it with an “as is” lease extension you will have to wait 2 years for a statutory. And if the lease is still 94 years the lease extension should wipe out any ground rent. You would get 90 years plus the original remaining term at a ‘peppercorn rent” i.e.nil. So use it as a negotiating tool to get the price down to cover your lease extension fees in 2 years time. Do not let the purchaser do a deal for a voluntary lease extension.