LEASEHOLDERS – BEWARE OF EXPENSIVE LEASE EXTENSIONS
It is very important that leaseholders are aware that a property with a lease of less than 80 years left to run is more expensive to get the lease extended.
Leaseholders of flats or apartments with a long lease have a statutory right to a new lease, in substitution of their existing one, extended by 90 years – and with any ground rent reduced to a peppercorn rate.
Lease extensions have come to the fore in recent years, with leasehold properties built in the 1960s, 1970s and 1980s now needing an extended lease to maintain their values and to prevent the property from becoming unmortgageable.
The only qualifying condition for an extension is that the leaseholder must have held the lease for 2 years or more – the benefit of the leaseholder’s claim under the statutory procedure can be assigned to a purchaser of a property.
It is possible to agree a lease extension outside of the statutory procedure if the landlord approves – which will often depend on whether the premium payable by the leaseholder, i.e. the purchase price, can be agreed. Also, many landlords do offer incentives to leaseholders to extend as a source of extra revenue.
The purchase price is calculated by a statutory formula and requires the involvement of a surveyor, unless the parties have been able to reach an agreement. It is important to note that this ‘marriage value’ is payable only where the lease has 80 years or less to run and this is significant, particularly for high value flats.
For further information on lease extensions please contact Perdip Bhachu – Solicitor with Prince Evans Solicitors LLP – by telephone on 020 8567 3477, by e-mail at firstname.lastname@example.org.