Do I need to extend my lease if I own a share of the freehold?
Even if you co-own your freehold (also known as ‘share of the freehold’) your flat lease will still exist; you will still own a leasehold flat, but with the added benefit of a share in the freehold.
Mortgage lenders and future buyers will still want the lease to be extended, regardless of the fact that the flat benefits from part-ownership of the freehold.
Why do I need to extend my lease if I own a share of the freehold?
The main reason for this is because your lease is the ‘contract’ which governs what goes on in the building and, for example, what proportion each flat contributes towards the building’s maintenance and insurance etc.
If the lease did not exist, none of this would be regulated and lenders would not be happy to lend against the flat.
Also, the reality is that, if the lease ran all the way down to zero days, you would have to move out and hand the flat back to the ‘freeholder’. As such, a lease extension would be required to ensure that the lease never gets that short.
How to extend your lease if you own a share of the freehold
Do I have to pay a premium if I own a share of the freehold?
As you would effectively be granting a lease extension to yourself (as freeholder, to leaseholder), there would usually be no premium (‘price’) payable for the extension, other than the legal costs and Land Registry expenses involved.
Do freehold-owners have to agree to your lease extension?
All other freehold-owners must be in agreement to your proposed extension; although they don’t all necessarily need to extend their leases at the same time. Their involvement/co-operation in the transaction may be required, depending on how the freehold title is held at the Land Registry.
It would be usual for a freehold-owner’s lease to be extended to 999-years with the ground rent officially being reduced to a ‘peppercorn’ (a legal term for nothing at all); albeit, you will not likely have been paying yourselves ground rent anyway.
The Team at Frettens have also dealt with 200-year extensions where that is preferable to clients as, after all, most buildings may not be standing in 999-years’ time!
Collectively extending leases
In some circumstances, where all leaseholders in the building are extending their leases at the same time, the leases can be generally modernised and brought up to date.
This isn’t always possible where less than 100% of the flats are extending at the same time, as this may cause conflicts between what the leases permit/restrict at the building. This, in turn, could cause legal and day-to-day issues for the owners.
We offer multiple-instruction discounts where more than one leaseholder/freehold-owner instructs us at the same time, so it is cost-beneficial for as many owners to extend at the same time as possible.
A specialist lease solicitors view
Associate and Leasehold Specialist, Niki Adkins, says “Owning a share of the freehold is beneficial from a management point of view, and to enhance the value and appeal of your flat. However, the lease length still needs to be preserved and we would be delighted to assist. We deal with these types of lease extensions on a daily basis, so make it as easy and straight-forward for clients as we can.”
Lease extension solicitors in Bournemouth, Christchurch, Poole and the New Forest
Our specialist Leasehold Property Team is one of the largest in the region and are happy to discuss any of the issues outlined in this article.
Please call 01202 499255 and Niki or a member of the team will be happy to chat about your situation and your specific requirements.
We offer all new clients a free initial chat with one of our bright, knowledgeable lawyers.