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Lease Extensions and Enfranchisement

The Leasehold Reform Housing and Urban Development Act 1993 (as amended) governs the right to an additional term of 90 years, at a peppercorn ground rent.

This means ground rent is no longer payable after the lease has been extended meaning the ground rent is effectively extinguished. The additional 90 years is in addition to the present unexpired term.

You may be having problems selling your flat due to a short lease so extending the lease can provide for a more marketable property.

You might have a clause in your lease which will lead to a significant rise in the ground rent in the future. This would certainly affect your ability to sell.

You cannot extend your lease if:

  • the landlord is a charitable housing trust and the flat is provided as part of the charity’s functions;
  • if the building is within a cathedral precinct;
  • if the property is owned by The National Trust.

Crown properties are excluded. Although the Crown is not bound by the legislation, the Minister has stated to the House of Commons that the Crown will be prepared to comply with the principles of it. Therefore, it is possible to extend a lease of a Crown property.

To ‘qualify’ as a leaseholder you must own a ‘long lease’ and have been the owner during the past two years; not as a business or commercial tenant. You do not need to have been in occupation of the property for this period, simply owned the lease for at least two years.

A ‘long lease’ is defined as:

  • A lease granted for in excess of 21 years
  • Leases which contain a covenant providing a right of perpetual renewal
  • A lease that ends on death or marriage or a date unknown
  • A leaseholder having held over at the expiry of a long lease, and the landlord has not served a notice terminating the tenancy
  • A shared ownership lease where the leaseholders’ share is 100%

If the Tenant’s Initial Notice has been served validly it can be assigned with the lease when the flat is sold. This way the owner/ leaseholder, if they meet the requirements, can serve notice and sell the flat with the benefit of the notice. The purchaser can then proceed with the application without having to wait the two years. This is of help where a purchaser will not wait to qualify or where a short term lease poses mortgage difficulties.

We recommend a solicitor is instructed to serve the relevant notices and manage the legal formalities.

Court cases have decided that offers made in notices that cannot be justified in Valuation Terms render the notice invalid. A Professional Valuation is important not only to ensure you understand how much you should pay but also to ensure you do not waste time and money.

You will be liable for the reasonable costs of the Landlord for a valuation and for the conveyance but not the hearing or any negotiations.

If you require professional valuation advice regarding the premium for a lease extension, please complete the below pro-forma and we shall be in touch if we consider we can assist.

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Collective Enfranchisement

For detailed information about Collective Enfranchisement please click here or contact us directly on 0207 637 7554.

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