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Alex J.
Alex J., Solicitor
Category: Property Law
Satisfied Customers: 3497
Experience:  Two years conveyancing experience.
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I own a flat in a block of 4 and we all own the freehold is

Customer Question

I own a flat in a block of 4 and we all own the freehold is there any advantage in me extending the lease as it has it has only 20 years left on the lease will it be better for me to extend the lease for when I sell it or leave it The rest of the owners are not interested
Submitted: 2 years ago.
Category: Property Law
Expert:  Alex J. replied 2 years ago.
Hi,

Thank you for your question and welcome.

My name is AJ and I will assist you.

In theory you should be able to extend the lease for free as you will all need to extend your leases at some point. Technically speaking you should all pay a premium and then split the premium between the four freeholders effectively cancelling out any money you have paid, so that is why in thoery it should be free.

The problem is when the other tenants are not interested in extending then it may mean that you will have to pay the premium if one of them wants to be difficult and make a quick buck. This obviously sets a precedent in the future as then everyone will have to pay if they want to extend. What they wont realise is that as you have only got 20 years left as every year goes by the extension premium would increase significantly.

Therefore your starting point will have to be if your fellow tenants will agree to the extension for nothing on the basis that it sets a precedent for everyone else to do it for free. You will find it alot easier to sell the property with an extended lease because anyone purchasing the property wont be able to get a mortgage on a 20 year lease even if you own the freehold as it is the lease that has the security value.

I look forward to hearing from you.

Kind regards

AJ
Customer: replied 2 years ago.

Not sure what you mean that we should be able to extend the lease for free the paper would have to be done and it's not going to be done for nothing I agree it be cheaper if the four of us went ahead


 


What premium are you talking about why would we have to pay for one and the extension premium not sure about that never heard of that before


So you think the mortgage company will not give lend any money if the lease is so short even though we own the property

Expert:  Alex J. replied 2 years ago.
Hi,

Thank you.

My apologies when I mean for free I mean with a lease premium payable. You would still need to pay a solicitor to draft the leases.

Normally if you are not your "own landlord" if you wanted to extend the lease you would have have to pay the landlord a lease premium to do so. In this circumstance you are your own landlords and should be able to agree that no premium is payable as you all derive the same benefit.

Yes a mortgage company will not lend on a residential lease less than 50 years unless it is a super prime residential property worth millions of pounds.

Kind regards

AJ

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