Do you need to extend your Lease?
Unlike freehold property, the value of leasehold residential property actually falls with the passage of time as the lease term reduces. This issue becomes increasingly pertinent as the lease term becomes shorter, as it becomes much more expensive to extend the lease when there are 80 years or less left to run on the lease. In addition, most mortgage lenders will not consider lending on a property with less than 80 years left on the term, as such this will have an obvious negative impact on its marketability should you wish to sell.
Thankfully, there is something that owners of leasehold residential property can do to protect their interest in the property. The Leasehold Reform, Housing and Urban Development Act 1993, as amended by the Housing Act 1996, and the Commonhold and Leasehold Reform Act 2002 gives owners of leasehold property the right to acquire a new lease for the remaining term of the existing lease plus a further term of 90 years AND reduce the ground rent to zero.
How do I extend my lease?
The process of extending the lease should preferably begin when the lease still has more than 82 years to run, this ensures that all matters can be concluded well before the 80 year cut off point.
Firstly, you need to instruct a specialist Chartered Surveyor to undertake a specific type of valuation in respect of the property. This valuation is intended to calculate the amount (the premium) that should be offered to the freeholder in return for them agreeing to the new lease in accordance with the terms of the above legislation.
Once you have obtained your valuation you have two options available: -
Instruct your solicitor to serve a section 42 notice on the freeholder. This starts the statutory process under the act, you will incur additional professional fees for your solicitor, and you are also likely to be responsible for the freeholder’s legal costs.
We can approach your freeholder informally and negotiate on your behalf in order to try and achieve a prompt and cost effective conclusion to the matter.
If you are looking to take advantage of your statutory right to extend your lease, then please call our office for your free initial consultation. Call us today on 0203 633 4493.