Flat-Living.co.uk Lease Extensions
Lease extension applications can be costly affairs, both in terms
of premium paid for the lease extension and also the fees.
Fees are assessed against a test of reasonableness, but a landlord is
not necessarily required to proceed with the cheapest quotation: if he
does not, he must use his usual advisers. Even then his costs are not
beyond question.
For a tenant the best negotiator rather than the cheapest fee quotation
should be the priority as this could ultimately save you thousands of
pounds.
Lease extensions are available once you have been the registered
owner of your flat at the Land Registry for 2 years. The service of
Notices for a formal claim is under Section 42 of the Leasehold Reform
Housing and Urban Development Act 1993.
Bear in mind this is a compulsory purchase process, but a landlord is
liable for his own negotiation and court or tribunal costs. Therefore,
after obtaining your valuation, check if informal negotiation is an
option. This could save time and cost. However, you should remember
that quite often a landlord will look to keep the ground rent income: if
so, there is scope for further savings on the premium.
The reason for obtaining a lease extension is generally that you are
looking to sell, raising finance or wanting to protect the lease length.
Therefore, timing against savings should be considered.
The crucial date is 80 years remaining on a lease. Above this lease
length you do not need to share the “marriage value” or “profit” created
from a lease extension. Below you do. If your lease goes under by one
day there is potential for up to a 25% increase in premium.
Equally the prevailing market conditions must be considered. From
the table below, using the example of a £150,000 flat on an 79.99 year
© Justin Bennett Bsc (Hons) MRICS,
and 80 year lease, at £50 fixed ground rent, it is possible to note that
Director, Langley Byers Bennett
the premium value will almost be in line with the market. The payment
of ground rent means that this is not exactly in line.
The lease of “lease and value” will have an affect as well as market
conditions. “Waiting for the right time” is not necessarily the best
option. However, with the market, according to the statistics and
press, being on the rise, or at a minimum stabilising, the advantage of
a fixed valuation date and lease, being the date that you serve your
notice under the Act, the time is now.
04
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32