You might already know that a leasehold interest is a decreasing asset which will need to be extended but what else do you need to know ?
1. Statutory right
A Leaseholder who has owned a flat for more than 2 years has a statutory right to a lease extension and a landlord cannot refuse to grant an additional 90 years and to reduce the ground rent to a peppercorn (ie NIL). The process and timetable is fixed by the legislation.
Alternatively the parties can reach an informal agreement outside the statutory process.
2. Reform is coming
The government have announced reform is coming and it is generally expected to be leaseholder friendly possibly permitting 900 additional years but the exact details are not yet known.
SLC solicitors can help you decide whether it is better to extend now or wait until the reforms are confirmed.
A Leaseholder pays a premium to the landlord for extending the lease. Calculators are available online to give a ball park idea of the premium likely to be paid but a surveyor’s advice is usually crucial to understand if the proposed premium is a good deal. The Leaseholder is also responsible for the landlord’s costs in extending the lease.
4. Why does 80 years matter ?
Under the current regime, lease extension becomes more expensive when there are less than 80 years remaining on the lease as marriage value is included as an additional valuation basis in calculating the premium. You should check the remaining term on your lease or leases and, if you are a leaseholder approaching 80 years remaining (ie a 99 year term granted in the mid 2000s), you should be seriously considering making an application before it becomes more expensive.
5. Applying to the first tier tribunal
The First Tier Tribunal can determine any aspect of a statutory lease extension which is not agreed between the parties such as the costs or premium payable. Each party usually bears their own costs at Tribunal so there are not the same cost implications as with the court.
SLC Solicitors act both for leaseholders in extending the term of their lease and landlords in granting extended terms. We can provide advice on all aspects of the statutory process or extension by agreement to determine which is right for you. Contact us below.