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Most leaseholders of flats in England and Wales have a legal right to  purchase at market value a new lease at a peppercorn (i.e. nil) ground rent within deadlines laid down by law.  A leaseholder who has lived in their flat for two years and has a lease with a term of over 21 years remaining is entitled to negotiate a new 90-year lease extension on top of the existing unexpired term.

For a leaseholder, acquiring a lease extension is an important way to protect the value of your flat.   With any lease, the length of time left to run has a major impact on the value. If the lease has only a few years left then its value drops dramatically as any purchaser will not be willing to part with a lot of money in return for only a short period of ownership. Extending the lease increases the value.

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It is important if you are selling your lease to widen the market for the property. The problem with short leases is that prospective buyers will struggle to find a mortgage if the term is not long enough. Extending the lease increases the market for its purchase.

A lease extension can be used  to correct any defects or problems that the lease may have. If for example the flat is held under a lease that was created many years ago then it is possible for some of the clauses to be redundant or irrelevant. The new lease can be drafted in a modern manner and benefit both the leaseholder and landlord.

The law puts the leaseholder in the driving seat as the leaseholder can start off the statutory extension process by serving a notice on the landlord.  The notice must contain certain specified information, such as a proposed price for the lease extension.  This price must be reasonable and so it will be necessary for the leaseholder to obtain a valuation from a suitably qualified surveyor.  The statutory procedure sets out a formula for calculating the value of a lease extension.   The leaseholder is responsible for paying the landlord’s costs of the extension and may be required by the landlord to pay a deposit of 10% of the proposed premium.

The landlord has two months to issue a counter notice confirming whether they admit the leaseholder’s request for an extension and what terms the landlord wishes to negotiate (usually the price!).  A period of six months is set aside for the landlord and leaseholder to agree terms and within two months of these terms being agreed, the new lease extension must be entered into. Once the process has been started, the right to acquire the lease extension can be transferred by the seller to the buyer upon completion of the purchase of a flat.

The statutory procedure for lease extensions provides a clear and certain process for both leaseholder’s and landlords to follow.  However, the process is very strict with regards to the information that must be supplied and the time limits that must be followed and so consequently there are a number of potential traps and pitfalls along the way.  Whether you are a leaseholder seeking to extend your lease or a landlord faced with a notice of extension, we can help you.  Contact a member of our commercial team for further advice on 01623 451111.

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Lease enfranchisement


What is it?


When you buy a leasehold property you own the leasehold title but a third party owns the freehold title. Lease enfranchisement allows the leaseholder owner to acquire the freehold.


Why would you want to acquire the freehold?


If you own the freehold it allows you to:-


1. grant lease extensions yourself;

2. control the management of the building  and

3. if the lease needs variation etc then this allows you the freedom to do so.


Can I apply? 


To qualify to apply for enfranchisement the following must be satisfied:-


1.there must be at least two flats in the building;

2. at least 2/3 of the flats, must be let to “qualifying tenants”


What is a qualifying tenant?


1. the lease must be for 21 years or more (certain other leases do qualify);

2. at least 50% of the flat must join in the application, if there are only twp flats both must participate;


What is the procedure?


There is a set procedure for the application starting with the tenant serving a notice with required information on the freeholder. I would suggest that a solicitor be involved at this stage to ensure that the procedure is followed.


What will the tenant have to pay?


1.Usually the tenant will have to pay certain fees of the freeholder and

2. the purchase price for the freehold the price depends on a number of factors such as the length of the leases and the value of the flats. If the lease term is over 80 years less value will need to be paid.


If you require any assistance with such an application Fidler and Pepper have a specialist team who handle such cases and we would be happy to provide you with a quote for the work. Please call Christie on 01623 448302 for further information

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