The value of a leasehold is affected by how many years are left on the lease. The shorter the remaining time, the less valuable it is to extend your lease. If you own, or are you considering buying a leasehold property, then you need to understand the value of your investment.
Does the freeholder have to agree to a lease extension?
Niki Adkins is an Associate and the Lease Extension Specialist at Frettens with Many Years' experience in this area of law. Niki advises that "This depends on how long you have owned the property. If you have held the lease for two or more years, you will have a statutory right to extend the lease under the Leasehold Reform Housing and Urban Development Act 1993.
The lease would be increased by an additional 90 years and the ground rent will be reduced to a peppercorn rate (zero). It is worth noting that the Freeholder can not withdraw from a Statutory procedure.
For leaseholders with less than two years of ownership it may be possible to negotiate a lease extension with the Freeholder, this is called an Informal lease extension. The terms of the extension and the number of years are variable. The Freeholder can withdraw at any time. "
Can the freeholder refuse?
In a nutshell 'No' in respect of the Statutory process (as long as it is followed correctly) and 'Yes' in respect of an Informal request. Accordingly, the Statutory route is more preferable as the Freeholder can not back out.
When is the right time to extend the lease?
The earlier the better but most importantly the 80 year mark as an additional compensation will be due to the Freeholder, known as the 'Marriage Value'. The cost of your lease will increase sharply at 80 years and lower.
How much will it cost to extend my lease?
We can provide estimates of our costs and the likely expenses. In order to establish the premium payable to the Freeholder for the extension, you would need specialist valuation advice, which we can organise.
How long does it take to extend a lease?
A Statutory lease extension can take between 6 - 9 months and an Informal 6 - 10 weeks.
Can you buy the freehold of a leasehold property?
It is possible for a majority group of leaseholders to purchase the freehold of the building by a process known as 'Enfranchisement'. If the Freeholder offers the building for the leaseholders this is known as the 'Right of First Refusal'. We can offer our advice and legal services for both these procedures - please contact us for further advice.
If you have any questions, you only have to ask us at Frettens . Please call 01202 499255 or 01425 610100 and Niki or a member of the team will be happy to chat about your situation and your specific requirements.