| Most
leaseholders have the right to extend their lease by 90 years
which is on top of any unexpired term. You may want to do
this if there are not many years left on the lease you originally
bought as it could increase the value of your property and
it is usually easier to sell a property with a longer lease.
Extending the term of your lease
may also mean that you can avoid a clause which permits a
significant rise in the ground rent. A lease extension is
usually easier than buying the freehold.
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Qualification
To be a qualifying leaseholder you must have
a lease which was originally granted for a term of more than
twenty-one years and you must have owned that lease for at
least two years. You do not qualify if the landlord is a charitable
housing trust.
Procedure
To start the procedure you or your solicitor
will need:
• to identify the "competent landlord",
in most cases this will be your landlord, but he may be a
headlessee with a lease only slightly longer than yours;
• details of any intervening or head leases and;
• a copy of your lease and the registered title.
Service of a “Tenant’s Notice” triggers
the statutory procedure and you will be liable for the landlord's
reasonable costs from that date. If you are buying a flat
with a short lease it may be possible to have the current
owner serve and register the Notice between exchange of contracts
and completion (assuming they meet the qualification
requirements) so that the benefit
of the Notice can be transferred to you upon completion to
avoid the two year waiting period. The Tenant’s Notice
states the premium that you propose to pay for the lease extension.
After the service of the Tenant's Notice
the landlord is entitled to require evidence of your title.
The landlord has a period of 21 days from the date of service
in which to request the information. In the event that you
do not comply the Tenant’s Notice would be deemed withdrawn
with costs payable to the landlord.
The landlord also has the right to inspect
the flat for the purposes of a valuation and is entitled to
the payment of a deposit (£250 or 10% of the proposed
premium whichever is greater).
The landlord must serve a Counter-Notice
in which he may agree your right and accept your terms (or
propose alternative terms); not admit your right and give
reasons; or refuse to grant the new lease because he intends
to redevelop the building.
If the landlord fails to serve a Counter-Notice
by the date specified in the Tennant’s Notice an application
can be made to the court for a Vesting Order granting a new
lease on the terms proposed in the Tenant’s Notice.
Where the price or some other aspect of the
conveyance cannot be agreed, there is a statutory period for
negotiation. After an initial two months either party can
apply to the Leasehold Valuation Tribunal for an independent
determination. The new lease will be at a peppercorn rent
and otherwise generally be on the same terms as the existing
lease.
Valuation
Valuing the lease extension is not an exact
science. Your solicitor should be able to recommend a surveyor
to provide a valuation from both the leaseholder’s and
the landlord’s perspective. You need to consider that
the eventual cost of the new lease will be the premium plus
both your own and the landlord’s reasonable legal and
valuation costs.
The premium payable is a combination of the
amount by which the freehold value will be reduced (the longer
the unexpired residue of the existing lease, the less this
will be) and the marriage value (the increase in value of
both the leasehold and freehold interests). The marriage value
will only be payable if the existing lease has less than eighty
years left to run, so extend your lease before this date is
reached!
What
is a Lease? |
Are
There Different Types of Leases? |
Extending
a residential lease |
How
do I extend the lease?|
How
much will it cost? | Lease
Extension |
Car
and Vehicle Leasing |
Example
of Lease Agreement |
Extension
of Short Leases on Central London Properties |
Rental
Challenges |
