Owning your own home

No, but if anyone's interested I'll send some of the inside.

@danstuff is right - get the current seller to kick the process off if you can.

The only distinction on this advice is to try to make sure they're extending via the statutory S42 process rather than the informal agreement with freeholder process. The former process will mean you get the exact same lease as the current buyer. The latter process may mean you end up with new onerous terms at the whim of the freeholder - terms which the seller may not care about since they won't need to deal with them, you will.

My pal bought a flat on this basis and the seller extended via the informal agreement process and inadvertently picked up a new clause linking ground rent to RPI. Honestly if that's the worst he got I'd consider him quite lucky, but it is an uncertainty you don't want to have to deal with.

@ChainBreaker is also in the area

Reason enough to avoid....

I'd avoid it if I knew...

What we talking about?

Thanks for that, I'll make sure it's the right one.

This is the letter from the freeholder's solicitors to the current owner in response to their request to renew the lease a year ago. Are these the kind of terms that I need to worry about and avoid, or are they ok?

1 Attachment

Definitely run if you see me in Rapha... Day of the Body Snatchers!

Question: Buy to let mortgage. 25% LTV (20ish grand). No income (for one applicant). Do not currently own the property we'll be in. Possible?

Ground rent doubling every 25 years?
150 - first 25 years
300 - 25 to 50 years
600 - 50 to 75 yrs
1200 - 75 to 100 yrs
2400 - 100 to 125 yrs
...

Nice little earner for the grandkids and great-grandkids!

I'm not a lawyer obviously but:

• lease extension figure seems high - I was quoted £24k for informal extension and £16k for formal
  
• service charge clause may be a can of worms - our service charge was put up to £220 a month in order to create a reserve fund; this would allow your guys to do the same
  
• ground rent clause is standard - mine follows this format
  
• suspect legal costs wlil be closer to £4k if pals are anything to go by
  

"modernised" here likely means screw over the lessee.

For example the reserve fund for repairs. A good idea in principle. But who does the estimating about how big the payments need to be. And who gets the benefit of any interest the reserve fund earns in periods between repairs. And who decides on what contractors the freeholder uses (is his buddies who overcharge)?

The doubling of ground rent every 25 yrs equates to about a 3% annual increase in ground rent. Not outrageous but a bit on the steep side given current long term risk free interest rates.

Agree Zerostar.

On ground rent, the norm seems to be a base increase with further increases linked to retail price index. Again not exactly outrageous but also a bit more complicated to work out and verify. Personally I'd prefer the doubling.

It's roughly a 3% increase per year - not extortionate, but still rent seeking with no value being added.

[Edit] What ^^ said.

Thanks you two. The value is about right I think, based on online calculators. 4k for legals sounds about right too. @BleakRefs is the formal lease extension normally cheaper than informal? Formal as in, statutory?

Formal/Statutory is normally cheaper than Informal, since Formal/Statutory is run by legislation which determines maximum amount charged and specifies no changes to lease.

Informal has no such guarantees or determinations so it can be more expensive up front, or cheaper, but include changes to the lease to make this money up elsewhere.

General advice on the matter seems to be: unless you have / are a very good lawyer, stay away from informal.

470ish with the short lease, 515ish with. Three bed mid-terrace Victorian conversion, top 2 floors, in E5.

If you go down the statutory route the term of the lease is extended by an extra 90 years and the rent is extinguished (technically reduced to a peppercorn rent) throughout the term of the new extended lease. The freeholder's proposed terms are less favourable than these, so I'd expect to see a significant discount on the premium to reflect that. If the premium which would be payable if you went down the statutory route would be around £36,400 anyway, then you'd be better off going down the statutory route.

Also, on their terms you'd end up paying all the freeholder's legal costs and £2,184 in fees (5% of £36,400 plus VAT). Worth bearing in mind when comparing it to the costs of going down the statutory route, where you're only liable for the freeholder's section 60 costs, which are the costs of investigating title, valuing the flat and the granting of the new lease.

Thank you very much for the clear advice. It's a shame I have to find these things out on a bike forum rather than from our errant solicitor.

the satanist downstairs from us has sold up. good riddance i say, however he's now ringing us up asking for copies of our passports, utility bills, piss in a cup to prove we share the freehold with him.

pretty sure that's his solicitor's job?

Yes, that's absolutely his solicitors job.

yeah thought so. he's on his honeymoon at the moment so quite why he didn't tell his solicitor to a) get fucked and b) tell him in no uncertain terms to earn his fucking keep is beyond us.

his love of satan is clearly greater than his love of due process. the massive devil fancying fool.

Costs: one soul.

Is it wrong that I'm contemplating purchasing the house below Greenhell for my new business venture of teaching after-work bell-ringing classes?

I'd invest.

Bell ringing and square plate emporium.