Lease Extension – Two year restriction?

by Readers Question

9:03 AM, 4th July 2019
About 3 weeks ago

Lease Extension – Two year restriction?

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Lease Extension – Two year restriction?

My wife and I own a small flat which we wish to sell. We have prospective purchasers, but they want to extend the lease from its current term, of 92 years, up to 99 years, even though they are cash buyers and not restricted by terms of lenders.

They are willing to pay for the extension, but they think that once they have purchased the flat, the lease cannot be extended until two years have passed. They therefore have asked us to have the lease extended prior to their purchase being completed.

Is there a restriction of two years, or would they be able to have the lease extended as soon as they complete the purchase?

Many thanks

Malcolm

Editors Note:

From the Leasehold Advisory Service >> https://www.lease-advice.org/faq/how-long-do-i-have-to-wait-before-i-have-the-right-to-extend-my-lease/

How long do I have to wait before I have the right to extend my lease?

Assuming you are a qualifying tenant in all other respects, you have the right to extend your lease once you have been the registered owner of the flat for two years. You do not have to have lived there, just owned it.



Comments

Neil Patterson

10:09 AM, 4th July 2019
About 3 weeks ago

Hi Malcolm.

Please see my editors note above.

Freda Blogs

12:47 PM, 4th July 2019
About 3 weeks ago

As current owner, you can serve the S42 Notice on the freeholder then the purchaser can pick up the negotiations after completion without having to wait for the 2 year qualification period. It is quite common and ordinarily it is done between exchange and completion. I suggest you get the purchaser to pay the legal and surveyors costs involved in the valuation of the premium and serving of the Notice.
For clarification: service of the S42 will entitle the owner to a statutory lease renewal of a further 90 year term (added to the existing 92 years) at nil ground rent. If the purchaser wants an extension only to 99 years (why bother??), that could probably be done by informal negotiation but you do not need to be involved and the purchaser may have to wait their 2 year qualification period if the freeholder doesn't wish to co-operate on that basis.

Dylan Morris

10:02 AM, 5th July 2019
About 3 weeks ago

An unexpired term of 92 years is simply not an issue whatsoever. Mortgage lenders are only reluctant to lend where lease has less than 70 years left. (A few will lend at less than this). Also there’s no point really in extending a lease unless the unexpired term is about to fall below 80 years, which is the point where a “marriage value” payment is due to the freeholder.
Quite frankly the buyers here haven’t a scooby about leases. All other things being equal, this should be a nice easy straightforward sale for you. I’d look for another purchaser who isn’t going to involve you in all this unnecessary crap and hassle.

Gracie

13:11 PM, 6th July 2019
About 2 weeks ago

It sounds like they've gotten partial information from someone who was perhaps caught out. They're right about the 2 years wait but certainly don't need to worry about it at 92 years. I'd say it's a waste of time and money to extend for 7 years. Surely waiting and doing a bigger extension down the line is more sensible in the long run - I'm not an expert, but all the costs involved for a 7 year increase.... Perhaps point them in the direction of a surveyor or info site which would give them full info on leases, so they can take the full picture into account rather than the one point that someone has warned them about.


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