If the lease of the flat you own or are looking to buy is approaching 80 years or less to run it could affect its value and make it harder to sell.
The shorter the lease becomes, generally speaking, the more expensive it will be to extend the term. When a lease has less than 80 years to run the value of a lease extension starts to increase at a greater rate. This is because for leases with less than 80 years an element known as the ‘marriage valueMarriage value explained: The freehold of the property is considered to be worth more to the leaseholders of that property than to anybody else. It is the hypothetical increase in value to the freehold that would come about if the leaseholder and freeholder were both the same person. This difference in value is referred to as the marriage value.’ can be brought into the valuation of a new extended lease.
Generally, where you have been a registered owner of the leasehold interest in your flat for at least two years you will have a right under the Leasehold Reform Housing and Urban Development Act 1993 to extend your lease by a term of 90 years plus whatever is left of your existing term. The ground rent is also reduced to zero on completion of the lease extension granted under the 1993 Act.
You may be able to agree your own terms with the freeholder but it is almost always recommended to serve statutory notice of your right to extend the lease because this will lock the freeholder in to fixed time limits and give you the option of asking the Leasehold Valuation Tribunal to make a ruling on what the price should be if the freeholder does not accept a reasonable sum. The freeholder has no obligation or incentive to accept a reasonable price unless you do use the statutory procedure.
We have extensive experience in acting for freehold landlords. If you own the freehold of a property which is subject to long leases and have received notice from the leaseholder(s) of their right to extend their lease, we will be able to guide you through the process and advise you of your rights and obligations which are essential for a freeholder to know when entering in these negotiations.
To extend your lease, including the service of a statutory notice, reviewing the counternotice and seeing the matter through to completion and registration of the lease extension, our fee is £1295 plus VAT and disbursements and bank transfer fee of £25 plus VAT. No separate charge is made for conveyancing. The disbursements are likely to be £12 for copies of the land registers £3 land registry search fee and a £40 land registration fee to register the lease. In addition it is recommended that your notice is registered at the land registry which incurs a fee of £20.