Do you own a leasehold flat? Are you worried that the lease is getting too short and you might have problems selling the flat now or in the future? Our lease enfranchisement (lease extension) expert, Robert Wood, is on hand to shine some light.
A lease is a diminishing asset because, when it gets shorter through the passage of time, it loses value. This is why the shorter the lease, the more it costs to extend it.
But help is at hand. There are two ways a lease can be extended – either by contacting the freeholder (the landlord) to negotiate a new lease, or by exercising your rights under the law and serving a special notice on the landlord to force him or her to extend the lease.
Under the first option, the landlord may offer whatever they please and you have no right of appeal. Under the second option, you will be given an additional 90 years on your lease and the ground rent will be immediately reduced to zero (a “peppercorn”). Under this option, you have the right of appeal to a tribunal.
To gauge whether what is offered is good or not, you should instruct a chartered surveyor to tell what you should pay for the lease extension and a solicitor, who is experienced in lease extension work, to go through the new lease to ensure that it does not impose onerous new obligations on you.
When should you extend your lease? If the lease is approaching 80 years, you should seriously consider extending the lease as when the lease falls below 80 years, the price increases dramatically.
In order to exercise your statutory right to force the landlord to extend the lease, you must have owned the flat for at least two years. It is often the case that landlords, when approached on an informal basis to extend the lease, will use any period of ownership of less than two years to their advantage in order to charge more.
As most leases were granted for 99 years (although most local authority right-to-buy leases were for 125 years), our advice is to check now how many years remain on your lease and to act quickly if that figure is approaching 80 years.
An experienced leasehold solicitor will be able to advise you on your rights and steer you through potential difficulties.
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