Lease Extension (Statutory & Voluntary)
Blakes offer a comprehensive lease extension service for both leaseholders and freeholders and can coordinate the entire process on your behalf from inception to completion.
Whether you are a leaseholder considering extending your lease or perhaps a freeholder that has received a statutory notice of claim, we are able to provide detailed guidance on the process and issues involved as well provide you with accurate and strategic valuation advice in order to secure the best possible terms by utilising the provisions within the Leasehold Reform Housing and Development Act 1993 (as Amended).
Call us today for a free consultation with one of our friendly advisors and to find out how we can assist you.
Why Extend my Lease?
A lease is effectively a right to use a property for a given period of time. As the lease term falls in, the value of the lease decreases and the cost of extending it increases. Obtaining a lease extension will protect and indeed enhance the value of your property immediately.
As buyers become more informed about the impact of lease length on property values it is becoming increasingly difficult to secure sales on flats with shorter lease terms due to the often high and uncertain costs of obtaining an extension. Most mortgage lenders have tightened lending criteria in recent years and borrowers are finding it increasingly difficult to raise funding or re-mortgage against flats with shorter lease terms, particularly under 75 years as they are deemed to be inadequate security.
The cost of extending your lease depends on many factors including its current unexpired term, ‘long lease’ value, the amount and pattern of ground rent payable, location and type of building.
The premium payable for extending a lease becomes significantly higher once the lease term falls below 80 years and this is due to additional compensation being payable to the freeholder which is known as ‘marriage value’. If you are a leaseholder it is therefore highly advisable to act before the lease term falls below this important threshold.
Do I Qualify?
If you have owned your flat for at least two years (you do not need to have occupied the property) and the lease was originally granted for a term exceeding 21 years then you will qualify for what is known as a ‘Statutory Lease Extension’. In return for an appropriate ‘premium’ payable to the landlord this legally entitles you to claim a 90 year extension in addition to the current unexpired term and also allows for the ground rent to be reduced to a ‘Peppercorn’ (NIL) for the entire lease term.
For example if your lease has 65 years unexpired and you are contracted to pay the freeholder a ground rent of £250 per annum, following completion of a statutory lease extension the lease will be extended to 155 years and no ground rent will be payable at all for the entire term. Your lease will otherwise remain on the same terms as the original although any defective terms can be rectified and modernised to ensure that it conforms to the CML (Council of Mortgage Lenders) requirements.
If you haven’t owned your flat for 2 years we may still be able to assist you by approaching the landlord on your behalf to establish whether reasonable voluntary terms can be agreed.
Our Complete Valuation & Representation Service
Once we have established eligibility for the lease extension, the first stage is to prepare a professional assessment of the premium payable to the landlord. We offer a ‘desktop’ valuation service at reduced rates when there is sufficient information provided to us on which to base the assessment (floor plan with measurements, estate agents particulars, photographs etc.) and the existing lease term is in excess of 80 years unexpired or you require an estimate in order to establish whether it is viable for you to proceed.
In all other cases, an inspection of the property is carried out in order to take detailed measurements, a floor plan and photographs. If you do not have access to your lease or other legal documents we can retrieve these on your behalf from Land Registry, the cost of which is nominal. We will then prepare a full valuation report with our professional assessment of the appropriate premium payable for the lease extension as well a sensitivity analysis in order to produce best and worst case outcomes in which to base the initial offer and subsequent negotiations.
We will liaise with your own or one of our highly experienced specialist solicitors throughout the process and if required negotiate the premium on your behalf with the leaseholder or freeholders surveyor in order to reach an amicable settlement, keeping you updated along the way. Our surveyors have an excellent track record in reaching successful settlements on behalf of clients but in the rare event that this is not possible, we will prepare an Expert Witness report and represent you before the First Tier Tribunal (formerly known as the Leasehold Valuation Tribunal).
We are able to offer significantly reduced rates for groups of leaseholders within the same building seeking to act together and in some instances, a collective enfranchisement (freehold purchase) may be worth considering. Please contact us for a free initial consultation and fee quotation.
The Statutory Lease Extension Process
Once we have prepared the valuation advice, we will then liaise with the appointed solicitor so that they can prepare and serve the initial notice on the landlord (Section 42 Notice) or if you are a freeholder responding to an initial notice, we will arrange for the service of the counter notice (Section 45).
The initial notice will state the premium we believe should be payable for the lease extension which will be specifically detailed within our valuation report. Your landlord will then have a two month period in which to serve a counter notice in response to your notice of claim. The Counter Notice must admit whether you have the right to a new lease under the Act and if not, it must specify the reasons why. The counter notice must also state which of the proposals in the initial notice are accepted, and specify counter proposals for any proposals which are not accepted. Disputed proposals in lease extension claims will normally include the premium payable and in some instances the terms of the new lease.
Deposit & Access
Once the notice has been served, the landlord may request a 10% deposit based on the premium proposed within the initial notice at any time and so we would advise that you have access to these funds at the beginning of the process.
The landlord is entitled to obtain access to your flat in order for them to have their valuation prepared although a minimum three days’ notice must be given.
Terms Of Acquisition
Once the counter notice has been served, upon your instructions we will commence negotiations with your landlord or leaseholder’s surveyor in respect of the premium and the appointed solicitor will negotiate the terms of the new lease.
If the terms of the new lease and/or the premium remain in dispute after two months following service of the landlord’s ‘Counter Notice’, either party may apply to the First Tier Tribunal to have these matters determined.
Any application must be made within six months of the date the counter notice was served and if no application is made within this time and terms of acquisition are not agreed, your notice will be deemed withdrawn, preventing you from making a further claim for at least 12 months.
Once the terms of acquisition are agreed, you will then have a period of 4 months in which to complete on the new lease. This means that funds need to be in place and the new lease must have been signed by both parties. If completion does not take place within this time, your claim will be deemed withdrawn unless a County Court application is made to protect your claim. Your solicitor will be able to advise you further in respect of this.
Costs Of A Lease Extension
As well as your own valuation and legal costs, you will also be responsible for the landlord’s costs in connection with your claim for a new lease under Section 60 of the Act. The landlord’s costs must be reasonable and if they are deemed excessive an application to the Tribunal in respect of this can be made on your behalf.
Each party is responsible for their own negotiation fees and for any costs associated with the preparation or representation if the matter is referred to the Tribunal.
For further information and more detailed guidance on the statutory lease extension procedure, please click HERE for a complimentary guide prepared by the Leasehold Advisory Service.