We received a record number of enquiries and instructions in Q3 2014 from leaseholders seeking to exercise their legal rights for extending leases or purchasing the freehold of their property (in partnership with other leaseholders within the respective building – “collective enfranchisement”) under the provisions of the Leasehold Reform Act 1993 as Amended.
Mortgage lenders have become increasingly cautious since the credit crisis of 2007/2008 in respect of what is deemed ‘adequate security’ with many banks now unwilling to advance loans against flats with less than 70-75 years at application stage. Blakes Chartered Surveyors been instructed to act for numerous leaseholders in recent weeks who are unable to take advantage of low interest rate remortgage deals due to the length of the lease on their properties.
A short lease term will significantly depress the market value of a flat and in many instances we have found our clients unable to secure a sale by private treaty with many having to opt for sales at auctions to cash buyers at heavily discounted values. The Leasehold Reform Act, allows leaseholders who have owned their property for more than 2 years to obtain a 90 year extension (at NIL ground rent) in addition to the existing term in return for an’appropriate premium’ payable to the landlord/freeholder.
The premium payable for a lease extension rises sharply once the lease term falls below 80 years unexpired (due to the inclusion of additional compensation payable to the freeholder known as ‘marriage value’) so it is highly advisable to act now if your lease is approaching this critical threshold. A lease extension will protect and increase the value of your property immediately, making it more appealing and sale able.
As specialists in Leasehold Reform Act matters, our surveyors will discuss the various options open to you, value and negotiate the premium payable and also instruct/liaise with our network of specialist solicitors to carry out the legal work on your behalf, providing a complete all in one solution to handle the matter efficiently and effectively.
