Lease extensions for flats – surely just another scam?

 

Labour Tory quotes

Perhaps I have missed something…?

So you know how it works on the BBC show, Homes under the Hammer: canny buyers pick up a bargain derelict property at auction, gut the interiors and have the local experts round to gush over the yield potential on their investment and initiative. The canny buyer pays once for the deal. The rest of their outlay goes on the building. Pretty much any freehold transaction goes this route, whether it is a derelict at auction or general trade. Continue reading “Lease extensions for flats – surely just another scam?”

Lease Extension Formula Spreadsheet

 

Formula 1

All that remains for me to do is to offer a download spreadsheet of the formula.

Online widgets as you know do not offer all the functionality of the formula. I have included as much as so far found studying Upper Tribunal cases, such as the various variables aside from ground rent increments and lease values. Continue reading “Lease Extension Formula Spreadsheet”

Lease extensions – the variables

einsteen sheep and formula

The Variables are not, as far as I know, an old rock band from the seventies – if they were, I am certain Johnnie Walker would be playing them. I’ve already listed most of them in the previous article but here again are the ‘band’ members: Continue reading “Lease extensions – the variables”

Lease Extension Formula Part 2

einsteen sheep and formula

ELMBIRCH PROPERTIES PLC [2017] UKUT 0314 (LC) re. 51 Humphrey Middlemore Drive

We start with bare facts:

12. The long lease of No. 51 was granted on 20 June 1986 and is for a term of 99 years from 24 June 1985. The initial annual rent was £45, subject to a fixed increase on 24 June 2016 to £90, and a further increase on 24 June 2049 to £180. On 9 November 2015 the tenants … gave the appellant notice under section 42 of the 1993 Act claiming a new lease…

We need to organise this data for the ground rent capitalisation calculations:- Continue reading “Lease Extension Formula Part 2”

Lease Extension Formula Part 1

einsteen sheep and formula

I’ll return later to the valuation caper. First I will work through an example of the formula using the case of ELMBIRCH PROPERTIES PLC [2017] UKUT 0314 (LC), as this was decided by the UT on 27 July 2017, well after the Mundy case.

The appeal involved two extension premiums. I will use just one, the calculation for 51 Humphrey Middlemore Drive, leaving you free to practice on the other. The Upper Tribunal’s maths are found on pages 20 and 21 of their decision. Continue reading “Lease Extension Formula Part 1”

Lease Extension Process

PV formula

The tortuous extension route is set out in Chapter II, Part I of the LRHUDA 1993, which confers (on a qualifying tenant of a flat for 2 years) a right to acquire a new lease on payment of a premium determined by a statutory formula. Except the freeholder does not have to counter with a formula based premium offer.

The new lease replaces the existing lease for a term expiring 90 years after the term date of the existing lease and at a peppercorn rent for the whole term (section 56(1) LRHUDA 1993 ). Continue reading “Lease Extension Process”

Lease extensions -the basics

Lease extension

Introduction

In this series of posts I will dig into the horror (from a leaseholder’s point of view) that is the residential lease extension valuation caper. There is much profit to be made at the leaseholder’s expense. This seems to be the deliberate intention of the legislation. Continue reading “Lease extensions -the basics”