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LEASE EXTENSION FREQUENTLY ASKED QUESTIONS

These are frequently asked questions about lease extension, and the process to extend a lease:

Lease Extension - How long a lease extension will I get?

Under the terms of the 1993 Act, you will get another 90 years added on to the existing balance of your lease. The entire time will be ground rent-free (technically peppercorn rent).

 

Lease Extension - What Are The Additional Costs?

Under the terms of the 1993 Act, you are responsible for the freeholder’s reasonable valuation and legal costs.

In some cases, especially where there have already been some other leases extended in the same building, the freeholder may not require a valuation or solicitor to validate the Claim, which is good for the leaseholder. More typically the procedure goes like this: When the freeholder receives a S42 Claim they will pass it to their solicitors to have the validity checked and usually ask the lessees representative to deduce Title. Then the freeholder will order a valuation survey and a S45 counter notice will be issued by their solicitors. Subsequent negotiations usually involve the freeholder’s surveyor, and if a premium is agreed, the freeholder’s solicitors issue a new lease or deed of variation.

If a premium cannot be agreed, either party can request an LVT decision. Usually each party pays their own costs relating to the LVT. However some leases allow the freeholder to charge all legal fees back to the leaseholder. In this case you can ask the LVT to consider this claim under Section 20c of the Landlord and Tenant Act 1985, so the freeholder will be required to pay their own expenses and not claim them back.

So you can see it is difficult to give an exact cost for legal and valuation fees, but as an approximate guideline allow £1-2000 with no LVT involvement.

 

Lease Extension – How long does the lease extension process take?

If you are looking to sell your flat and want to quickly extend your lease through a formal Claim under the 1993 Leasehold Reform, Housing and Urban Development Act, you will be disappointed – the process is neither quick or easy. The good news is that you can start the formal Claim process and then assign your rights to the buyer – who then does not have to wait for the 2-year ownership qualification period.

You would think that if you were offering the freeholder a large sum of money, they would move quickly to say ‘yes’, but for some reason the typical response time is glacial. Each stage often approaches the prescribed maximum. For example the initial S42 Claim has a period of 2 months before any counter notice, and most freeholders reply at the end of that period. Even when you have completed negotiations and agreed the final premium, the freeholder’s solicitors often move slowly in issuing a new lease. Overall the process can take from 4 to 18 months. If LVT intervention is required, add an extra few months.

 

Lease Extension – Leasehold Valuation Tribunal (LVT)

A frequent concern is “what happens if we cannot agree on a price for the lease premium – will I need to go to the LVT for resolution?”

A lot depends on the stance of the participants. Firstly, a majority of premiums are agreed by negotiation. Most freeholders are reasonable, and although they attempt to get the best price, a fair settlement is the most common outcome.

However in a minority of cases, the freeholder know the concerns that many people will have in relation to the LVT, as the cost and overhead of preparing a case at the LVT is considerable. In this case they refuse to negotiate in the hope that the leaseholder will just pay up to avoid LVT action.

In reality, for most lease premiums, it is not worth either party proceeding to a LVT, as both parties are responsible for their own costs relating to a LVT hearing. So brinkmanship comes into play, and most cases that look like they are proceeding to the LVT are settled at the 11th hour.

 

Lease Extension - How do I get a new Lease?

As part of the process, after the premium has been agreed, the landlord's solicitors will prepare a new lease. This may be a short lease with the new terms, referencing the original lease, or a deed of variation covering the altered clauses. In addition due to recent changes in the Land Registry requirements, an additional document of prescribed clauses will also be provided.

 

http://www.LeaseholdDoctors.co.uk/lease.html

 

Leasehold Questions?
http://www.LeaseholdDoctors.co.uk

WHAT NEXT?
Call us today on
020 8629 1066 or click here for no-obligation advice on how to increase the value of your flat.

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