As the lease to your house or flat reduces in length, so the value of your home deteriorates (as a proportion of its freehold or very long lease value). This is particularly so when the lease has less than 80 years remaining. At this point marriage value becomes payable and this substantially increases the premium payable.
Mortgage lenders and purchasers will be concerned about lease length which is an issue capable of frustrating a vendor’s sale of a leasehold house or flat.
Individual Lease Extensions
The Leasehold Reform Housing and Urban Development Act 1993 (as amended) enables qualifying leaseholders to acquire a 90 year extension to the current lease with the ground rent payable under the existing lease reduced to a peppercorn as part of the process. A qualifying leaseholder must:
- Own a ‘long lease’ (a lease originally granted for a period in excess of 21 years).
- Have owned the lease for at least 2 years.
It is possible for the existing qualifying owner who is in the process of selling a leasehold flat to submit a lease extension claim (by formal Notice) and then assign the claim to the purchaser who will complete the purchase of the lease extension after the sale of the flat. The purchaser, in this way, does not need to have owned the lease for two years as the claim was made by the seller who had satisfied the ownership test.
We can assist with providing a realistic valuation of the price to be paid, and by advising on what reasonable figure can be proposed in the Notice. If necessary we can then negotiate on your behalf with the landlord to agree a fair price for the lease extension.
Collective Enfranchisement (ie buying the freehold collectively)
The 1993 Act also enables flat owners in a block of flats to buy the freehold interest in their building. Unlike lease extensions there is no length of ownership period to be satisfied by flat owners who participate in the purchase. However:
- The block must comprise two or more flats.
- At least two thirds of flats must be held on qualifying leases (leases originally granted for in excess of 21 years).
- At least 50% of the flat owners must participate in the claim.
- Any non-residential / commercial parts of the building must not exceed 25%.
Houses
The 1967 Leasehold Reform Act gives the owner of a leasehold house a right to buy the freehold interest in the house:
- The property must be a ‘house’ and vertically separate from its neighbours.
- The leaseholder must have owned the property for at least 2 years.
The 1967 Act is complex with different valuation rules for different categories of house. We can advise on the correct basis of valuation and deal with the preparation of valuation advice and negotiations with the landlord as to the price to be paid.
How can we assist you?
We have a respected team of Chartered Surveyors with specialist expertise in the leasehold reform field, supported by our local estate agency offices.
We can help you an early stage to take a proactive step to protect and enhance the value of your property.
The process for both landlord and leaseholder can be time consuming and complex. We are able to provide you with sensible, realistic and cost effective advice to arrive at the right price or premium. We will work closely with your solicitors to ensure that the correct steps are taken to bring about a successful outcom