Leasehold Extension/Flying Leasehold

[LAC123]

I’m looking for some advice regarding leasehold extension.

I purchased a property 12 years ago that is freehold. I was pretty unaware at the time as I was young, but there's a strange set up where a first floor bedroom belonging to my property is leased to the house next door on peppercorn rent. It was not a bedroom I expected to have and is obviously completely cut off from my property.

When I first moved into the property, the neighbour approached me asking me to sign over the bedroom to tidy up the deeds, I pointed them to my solicitor but in the end I didn’t really follow it up as I had a lot going on with the move and did not want to be put on the spot and I never heard anymore of it.

Fast forward 12 years and the neighbour has put their house up for sale, it has sold straight away STC and I’ve been waiting to hear about this room. As the remaining lease is around 50 years, I believe it is not saleable/mortgageable without an extension on the lease, so we need to sort it out. They have since approached me and asked me to extend the lease on this room. There was mention of ‘money if I want it’. The property would be a 1 bedroom without said room.

I was just wondering what the right thing to do in this situation would be? I will be getting a solicitor and their advice this week. I feel bad demanding money, but also don’t want to be hoodwinked. I am wondering if it was the other way around would I be expecting this lease extension free of charge. It’s a bit of a strange situation.

Any advice appreciated.

[atticus]

What a strange situation! I guess someone messed up when setting up the arrangements in the first place.

There is usually a charge, a "premium" for a lease extension. There is a complicated formula that I do not understand, to do with calculating "marriage value". There is more to it than just the rent, which you say is a peppercorn.

I personally would be seeking something for this. I would certainly ask the other party to cover your full legal costs of this extension.

Alternatively, is there a way that the lease of this bedroom can be surrendered, so that you can add it to your property, making the necessary adjustments? You would be buying out the lease of that room.

[LAC123]

Thanks for the response, yes I briefly looked into "marriage value", seemed like it was half of the value the room would add to the property. Which would probably be quite a lot. But maybe a token value could be offered. I wasn't sure if there were any differences with this just being a room rather than a full property. It's a little awkward as we obviously know each other, being neighbours.

I would certainly expect them to cover legal costs involved and this was there intial offer 12 years ago.

Yes they did mess up with arrangements, I believe they were family memebers and split three properties in a strange way and then fell out.

No I have not been collecting antying, the contract is £1 per week, which I understand to be peppercorn rent and not someting you should collect.

I would love to be able to take the bedroom, but I don't think that would be viable given it would make their property only single bedroom property..

[atticus]

No I have not been collecting antying, the contract is £1 per week, which I understand to be peppercorn rent and not someting you should collect..

£1 per week is £52 a year which is £624 over 12 years. That is not a peppercorn.


As to the marriage value question, your neighbour would also be getting something of value out of the lease extension.