LEASE EXTENSION

How to increase the value of your flat with a lease extension and stop paying ground rent...

The Leasehold Reform Housing and Urban Development Act 1993 (as amended) is legislation which gives you the right to get a lease extension term of 90 years on top of your present unexpired lease term. The ground rent for the entire period is free (technically, peppercorn rent). See our informative videos on Lease Extension issues by clicking here.

Common reasons for a lease extension include:

• A short lease giving issues selling or re-mortgaging the flat

• Purchase of a flat with a short lease; you can use the present owner's ownership period to qualify you to apply for an immediate lease extension, without having to wait for the 2 year ownership requirement

• A significant ground rent increase clause, which can even be a percentage of value thus making the flat unattractive to buyers

• Your existing lease is approaching 80 years remaining. If you have less than 80 years left on the lease, you will have to share the increased value of your flat 50:50 with your landlord
  

For example, if you have 64 years to run on your lease, you could extend it to a total of 154 years - all ground rent free. There is a one-time payment, known as the "premium", to the landlord to extend lease.

Can you do it yourself? Yes, but be aware of the pitfalls. If the freeholder does not want to do a lease extension, or wants an unreasonably high premium, their solicitors can be particularly difficult. As experienced project managers, we can act on your behalf to check your eligibility, estimate the landlord's premium, prepare and serve the Notice of Claim upon your Landlord, deduce Title and follow up by negotiating on your behalf. We can search for 'absent or intermediate Landlords' and assist in arranging for an independent leasehold valuation to be carried out if required.

TO BE ELIGIBLE, YOU MUST MEET THE QUALIFICATION REQUIREMENTS.
To be a qualifying leaseholder you must own a "long lease", and have owned it for the past two years and not be a business or commercial tenant. In the case of a Buy-To-Let owner holding the property in a business name, as long as the lease is a residential lease, the owner will still be eligible for a lease extension.

You do not need to have lived in the property for this period, merely owned the lease for two years or more.

A long lease, by definition, is:

• A lease of a term of years in excess of 21 years when originally granted - the present unexpired term is not relevant.

• A shorter lease which contains a clause providing a right of perpetual renewal.

• A lease terminable on death or marriage or an unknown date (including the so-called "Prince of Wales" clauses).

• A leaseholder having held over at the expiry of a long lease, and the landlord has not served a notice terminating the tenancy.

• A shared ownership lease where the leaseholders' share is 100%.

You cannot complete a lease extension if the landlord is a charitable housing trust and the flat is provided as part of the charity's functions, or if :- the building in which your flat is located is within a cathedral precinct, or if it is owned by The National Trust. Crown properties are also excluded; although the Crown is not bound by the legislation the Minister has stated to the House of Commons that the Crown will be prepared to comply with the principles of  it.

Once the Tenant's Initial Notice has been served it may be assigned with the lease when the flat is sold. This way the present owner (leaseholder), assuming they meet the qualification requirements, can serve the notice and then sell the flat. The purchaser will be able to proceed with the lease extension immediately, without having to meet the two years ownership qualification for lease extensions. This can be of assistance especially where a purchaser does not want to wait to become 'qualifying' and / or where an existing short term of lease presents mortgage difficulties. Note the law is applicable in London, England and Wales.

FURTHER INFORMATION
Although it is not a legal requirement, we would recommend you appoint a leasehold valuation surveyor who would provide the "best and worst" case valuation, to be used in the Notice and possibly represent you at the Leasehold Valuation Tribunal (LVT), if required. Fortunately most extend lease cases are agreed without the need of the Tribunals.

When a price has been agreed, the Landlord typically issues a new lease or deed of variation. At this point you should contact a solicitor to verify on your behalf any modifications, exclusions or additions and to correctly register the new lease or deed.

Note: Under the terms of the Act, with a formal lease extension:

• You will be liable for the 'reasonable' legal and valuation costs of the Landlord relative to the Notice of Claim.

• You may be required to pay a deposit of 10% of the proposed purchase price or £250; whichever is the greater, immediately following the service of the Notice of Claim.

• You should have your finances in place relative to all the various costs that you will incur which would include the eventual price (premium) payable to extend lease etc. 

  YOUR GUARANTEE:

  If for any reason your lease extension application is refused by a mistake on our part, we will fully refund our fees.

OUR CHARGES AND SERVICES - FIXED FEES, NO SURPRISES
Probably the biggest concern of new clients is that they will have much legal and valuation work performed and then find that it is not possible to do a lease extension, or that the purchase cost is excessive for them at present to extend lease.

We solve this concern simply - At no charge, we will complete the necessary checks for qualification and entitlement - and also perform an estimated leasehold valuation of the premium that will be payable for the lease extension. To be able to perform the valuation, we will just ask you for some basic facts about your flat. The leasehold valuation is based on the discounted ground rent over the existing lease period, the reversion value of the flat and the marriage value of the flat after the lease extension. After the checks and valuation, you will have a good idea of the purchase price (premium) payable to the landlord. (Note this is an approximate valuation, we would recommend the use of a formal leasehold valuation to be used in the Notice of Claim and subsequent landlord negotiations. We can also arrange for a formal independent valuation by an experienced fully qualified surveyor who specialises in dealing with leasehold valuations.

At this stage, if you wish to proceed, we will prepare and serve the s.42 'Notice of Claim' for you, strictly in accordance with your instructions regarding the amount proposed by way of premium and any amendments that may be required. This will be served on the competent landlord (an intermediate landlord may not have the right to extend your lease the full 90 years) and copied to any additional landlords. At this point the Landlord is under strict requirements to respond within a fixed period.

Our fees for the preparation and service of the Initial Notice Of Claim, deducing Title, and follow-up negotiations are £475. We do not charge an hourly rate, and all fees are clearly specified in writing. After receiving the Notice of Claim, the Landlord may disagree (strangely they always disagree) with the premium offered. Upon  your instructions, we will negotiate on your behalf with the Landlord.

If negotiations fail, we can make an application to the Leasehold Valuation Tribunal (LVT) on your behalf (who will decide the premium payable), although at that point further fees would be payable. We are unable to guarantee any application will be successful or the amount of the eventual premium that may be determined by the Tribunal for the lease extension. We can arrange for a chartered surveyor to attend the LVT on your behalf the lease extension.

You will be liable for the 'reasonable' legal and costs of the Landlord relative to the Notice of Claim and the preparation / completion of the new lease (but not Landlord costs which are incurred in connection with any LVT hearing). Please ensure you carefully read our Terms and Conditions covering this website and our services.

COMMUNICATIONS
Throughout each stage of the process, we will keep you fully informed. Both by providing detailed descriptions of the process, but also on the progress of each stage. For your convenience, we will provide electronic copies of all documentation.

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 through a lease extension.

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