Today I received a 15 page copy of the lease relating to a property I viewed and am considering purchasing.

Only, I’ve been a freeholder for last 10 years and have forgotten anything I ever learned about leases. So its a little bit daunting as to what I may be undertaking..

In very general terms, the property is an upstairs apartment adjoining two others on a private lane, for which there is a 2/3 responsibility for upkeep of the roof and guttering, and 1/3 responsibility of upkeep of the private road surface and drains.
Also, I (the tenant) would need to cover two thirds of the annual building insurance costs (taken out by landlord).
An annual rent (ground rent?) of just £10 applies.

Also written in the document is the right for landlord to enter the property twice a year (with notice) to assess condition and demand works be undertaken if damage has been committed, etc.
These sections don’t sit easy with me, im not comfortable with someone else having strong rights over a property you are paying hundreds of thousands for.. but in a certain sense never actually ‘owning’ it

I’m probably being a little paranoid and im sure a solicitor would point out anything untoward but im wondering if I can gain any advice that would immediately flag a big warning sign before I go about undertaking a solicitor and accruing fees..

The lease ran at 99 years when it was created back in 1983 but the agents assure me that it would be easy and straightforward to have this re-extended to 99 years (and the ‘law’ would be in my favour to do so)
I’m a bit paranoid about hidden costs and tricky landlords working things in their favour, particularly when the lease is winding down to 60 years, which is when I believe mortgage companies get a bit twitchy.

To add further complication, the landlord (freeholder?) owns the large neighbouring cottage (party walls are shared), but has sold up recently, so effectively a new landlord is set to move in shortly.

Can anyone offer any thoughts/advice? Any experts out there perhaps willing to have a look over the lease?..

Please explain your thoughts/recommendations/advice to me as if I were an idiot, because I mostly am

If the lease is below 78 years then you need to start to factor in the marriage value in any calculations for lease extension. We extended ours about 6 or 7 years ago, it cost us about £15k.

The agents are being a bit lax with the truth about the lease. Yes it’s easy (i’m sure the landlord would love your money) but it’ll cost a bunch – it’s only cheap up to 80 years, after that you’re talking thousands. The below should give you an idea:

Lease extension calculator

As an example I had a flat worth about 150k, built in 1986 with a 99 year lease, to extend that lease would have cost approx 14k including the landlords legal fees etc (which you pick up natch). I flogged it in the end.

Mortage companies get twitchy sub 70 years when I looked into it – hence me shifting mine.

Also, you have to own the property for two years before the landlord is obligued to extend the lease. I guess they could do it before then, but why would they – in two years time they can charge you more.

Cripes – not a good start then.

Is it a given that extending a lease costs money then?
Can a landlord not just give consent to extend and a solicitor arrange for bobbins?
(im wondering if I can build in a clause in to an offer on the property to extend the lease prior to completion)

Most leases ive come across are originally set at 99 years, does this mean that hundreds of thousands of tenants across the country all currently face a huge incoming bill?

Someone say something positive about extending the lease..

Most leases ive come across are originally set at 99 years, does this mean that hundreds of thousands of tenants across the country all currently face a huge incoming bill?

It costs a lot less if you do it when there are more than 80 years remaining. I don’t understand why anyone wouldnt…

You could include a clause to extend the lease, but given it’s worth money, i’d expect to pay for it. Landlords generally want to make money.

But (big but) if the new landlord were a happy and generous fellow, delighted to help out, could the lease be extended for next to nothing by my solicitor?

I wouldn’t get your hopes up. Why would they (the landlord) give away potentially thousands of pounds? Would you?

The property should in theory be priced to reflect the short lease. If not, adjust your offer accordingly.

The current owner can serve notice if claim to extend or buy the lease to start the clock ticking and then it can be transferred to you, however an unexpired lease with your length is short and unless you can extend it will be difficult to sell – we sold a house with 85 years and had to buy the freehold but the lease had already been extended once.

You should get another 99 or 150 years by law but it may be an unreasonable cost and you have to go to a tribunal, even then the covenants in your lease look a bit odd and if they’ve put you off will put others off.

Unless you really like it I’d say that the vendor should fund out cost of lease extension and put the money in ESCROW until the lease is extended.

Our landlord offered us a lease extension or purchase if freehold, either way that wanted to make£10k out if us for a £110k house.

Ultimately it depends in the landlord of the lease. Ours weren’t very nice and wanted to make every penny. The power is all in the hands if the landlord. Get a good solicitor who is also on the list of the leasehold advice website listed above.

Without knowing the building those roof and insurance apportionments seem unusual, normally an even share for roofs anyway. I’d also be uneasy about access rights even if it is unlikely they’d be exercised,

The apartment I am interested in is 1st floor and covered by the entire roof section, so I can kind of see how I would be more responsible for the roof costs.

I may look into negotiating a lease extension as part of purchase as recommended above, but as others have also said, i’m not wholly comfortable about some of the other covenants.

It’s a shame as the space and position of this place easily trumps everything else i’ve come across on the market (perhaps now I know why).

Although technically marriage value is only taken in to account when the unexpired term is 80 years, the closer you get to that the less ‘reasonable’ the lease extension will be.

The landlord will essentially have the leaseholder over a barrel and on such a short lease will probably not play ball.

I’d definitely get the lease extension done as art of the sale, as you’ll have to pay your and their solicitors covneyancing costs on the lease extension (in addition to the standard conveyancing). Should only be a few hundred quid in total in addition to the lease cost, but it could drag out and if the initial cost is not reasonable then you’ll need to commission an independent surveyor for about £400 to help you get to a fair price.

Also bear in mind that the lease extension also gives the leaseholder an opportunity to amend the lease as well so watch out for sneaky amendments.

And the insurance – there may be a covenant that they use a specific insurer which may well be over the odds and they may be getting a cut from anything you pay on that premium. Our previous lease had a clause which meant we incurred a cost each year if we didn’t pay using their preferred insurance provider. We got stung for a £300 bill when we sold. If its written in to the lease there’s nothing you can do about it.

Have you had a solicitor look at all this paperwork or have they just passed it over to you? If they haven’t advised you on any of the stuff already mentioned in this thread then its clearly not an area of their expertise.

The lease ran at 99 years when it was created back in 1983 but the agents assure me that it would be easy and straightforward to have this re-extended to 99 years (and the ‘law’ would be in my favour to do so)

We’re just selling a leasehold flat, only it’s lease is 999 years (or was when built 20 years ago).

Pieface – thanks for your input.
I’ll hold my hands up and say that no-one has cast an eye over the lease document other than myself yet.
Im here to find out what I can before considering passing it on to a solicitor, as literally every penny counts at the moment.

If this lease shows that id be mental to proceed (according to anyone with prior experience), then ill save the bother and quit whilst im ahead.
If extending the lease can genuinely be kept down to a few hundred pounds, and the other covenants thrashed out without repercussion (potential insurance sting springs to mind too)- then im going to strongly consider the purchase.

FYI – I made a fairly cheeky offer yesterday and the agent has come back suggesting that another £3k will seal the deal – and that we could go forward on the proviso that the lease is extended at seller costs prior to completion..
So.. I need to start walking the walk..

The fact that they’ve been forthcoming with the leasehold information is reassuring.

There is every possibility that the leasehold can be extended amicably and relatively cheaply, you ccan just ask them to extedn it without involving solicitors, this is recommended as the first step, however solicitor’s may well be needed at some point to sort out the land Registry issues.

Personally I’d want the lease extended before I’d buy, otherwise you’re taking on an unknown risk, which could sting you down the line when it’s your turn to sell etc….

offer made on condition of lease extension prior to sale completion.

As you say, its worth at least seeing if an amicable private solution is at least possible (or if seller is willing to cover costs if not).

I paid 3.4k gbp to extend from 84 years to 999 years last year.

In 2001 I bought a flat with 75 years left, completed but with a letter of offer of extension from the freeholder. It cost 7-8k from memory.

You should always make money on the deal as I think its valued at 50% the total gain (ie, 50% of market value uplift with longer lease).

I assume that freeholder is at liberty to not demand a payment?

Only as the current freeholder is selling up (his adjoining property is sold), and I believe he is on good terms with the current leaseholder..

..its a long shot but fingers are crossed for a ‘free’ lease extension.

EDIT: Your market gain was valued at £3400 based on over 900 years of market inflation?! Not much of a pension 🙂