LEASE EXTENSIONS PRESENTATION TO OWNERS OF MARINERS WALK MARINERS - - PowerPoint PPT Presentation
LEASE EXTENSIONS PRESENTATION TO OWNERS OF MARINERS WALK MARINERS WALK AGM 30 th JULY 2012 David Robson MA(Oxon) MSc MRICS Tom Merralls (LLB) Solicitor Why should I extend my lease? Valuation and legal services How do we progress
David Robson MA(Oxon) MSc MRICS Tom Merralls (LLB) Solicitor
As if a regular AST
HOW THE GOVERNMENT EXPLAINS IT: “A lease is a right to use the property for a period of time. As a lease gets shorter the value of the lease and in real terms your property decreases and it becomes more expensive to extend the
(anything less than 80 years) because mortgage lenders may be reluctant to lend money on such properties.” [Source: The Leasehold Advisory Service - www.lease-advice.org]
I don’t care what happens in 70-80 years! However...
Look to sell at some point?
○ Solicitors: Advise purchasers for extension if 85 yrs or less ○ Lenders: Higher rates (at best) for 70-80 yrs. Virtually
unmortgageable under 60 years!
WHAT WOULD YOU DO AS A PURCHASER? WHAT COULD YOU DO AS A PURCHASER? SALE DEPENDENT ON CASH BUYERS / AUCTION
Wish to remortgage to raise some money?
○ Lenders: Same problem as above.
Pass on the ‘asset’ to a family member/s?
○ What asset?!
Can try to extend by direct negotiation with the freeholder
Extend under rights of Leasehold Reform Housing and Urban Development Act 1993
Depends on circumstance and the freeholder...
E.g. Assigning rights to extend the lease to a purchaser to enable completion of a sale.
Commercial freeholders: It’s their business - they know valuing a leasehold interest is complex, and therefore often quote and negotiate for extortionate premiums and try to get flat owners to sign up to onerous and costly terms.
Rights
Extend 90 years onto existing term (not just back to 99 years)
£0 ground rent for duration of entire lease (never mind periodic increases!) ...in return for a premium based on valuing the extension of the lease to compensate the freeholder accordingly. N.B. Finance and responsibility of the flat owner to pay for (reasonable) professional fees for both sides...but as a group there can be savings through economies of scale!
Date of Valuation
Present Market Value of the Property
Market Value of the Property with new lease
Relativity
Capitalisation of ground rent
Calculation of reversion
Marriage Value (if lease is under 80 years)
Provide the “best and worst” case valuation, in order to best
advise you of the possible outcome of the negotiations;
Advise on the amount of the offer to be made either to open the negotiations or in the Notice if served under the Act;
Respond on your behalf to the freeholder’s Counter-Notice to the
Negotiate on your behalf the price and the other terms of the lease, including representation at the Leasehold Valuation Tribunal (“LVT”) if this becomes necessary.
Robson v Sinclair Gardens 2011
Leaseholder Qualification
Owner of long lease for 2+years?
Originally granted lease must have been for a minimum of 21 years?
100% ownership if originally shared ownership?
...etc...
Freeholder
Address?
Intermediate landlords / head lease?
Absentee freeholders?
Copy of service charge demand or ground rent receipt
Once the process has started – controlled by statutory rules and timetable
Preparation of the information of the application;
Service of the s.42 Notice on the competent landlord (along with copies to head leaseholders and managing agents if applicable);
Response to landlord’s request for information if required
10% deposit (subject to £250 minimum)
Deduction of legal title
Conveyance of the new lease.
Pros
Safeguard and improve the value of your property No more ground rent payments to worry about Could be the difference between selling your property or not Maximise / enable a potential remortgage
Cons
Process can take 6-12 months...N.B. If you are thinking of selling soon Cost Payment of reasonable professional fees for both sides even if you
withdraw
Having the finance for the premium and fees must be considered...although in a group
the process can be structured to benefit from economies of scale on the professional fees. Act sooner rather than later, especially if approaching 80 years!
We’ve hopefully demonstrated we’ve got the expertise...but how do we work together to bring you savings?
Lines of Communication
Valuation Service
1 £600 per flat (usually £750) 2-5 £450 per flat 6-10 £400 per flat 11-15 £350 per flat 16+ £300 per flat
LVT work (if applicable): £230 per hr N.B. Prices subject to VAT
Freeholder’s ‘reasonable’ valuation fees
Legal Service
Notice Conveyancing TOTAL
1 £750 £750 £1500 per flat 2-5 £450 £500 £950 per flat 6-10 £400 £450 £850 per flat 11-15 £350 £400 £750 per flat 16+ £300 £400 £700 per flat
Plus disbursements: c.£200 Additional legal work: £230 per hr N.B. Prices subject to VAT
Freeholder’s ‘reasonable’ legal fees
Follow-up email from us for you to confirm interest to proceed with extension (within 14 days) Instruction, Terms & Conditions from Robsons and TJM Law Return signed documents (within 21 days) Serve s.42 Notices
Safeguard and improve the value of your property No more ground rent payments to worry about Easier to sell Maximise / enable a potential remortgage Economies of scale on professional fees
www.lease-advice.org
http://www.lease-advice.org/documents/Lease_Extension_Getting_Started.pdf
www.lease-advice.org/calculator
Members of
David Robson MA(Oxon) MSc MRICS david.robson@rrsurveyors.co.uk Ray Robson BSc FRICS MAE MIoD ray.robson@rrsurveyors.co.uk Tel: 020 8402 6666 www.leaseextensionvaluers.com Tom Merralls (LLB) Solicitor tom@tjmlaw.co.uk Tel: 020 8662 6090 www.tjmlaw.co.uk