‘marriage value’ if the amount left on your lease is less than 80 years. Normally you will engage a specialist
valuer or surveyor to work out the premium. This valuer will need paying and it is likely to be in the high hundreds or low thousands for a single flat lease extension. Your solicitor will be critical to the
process and again, resist the temptation of using the cheapest. You should avoid local family law solicitors for example that dabble in enfranchisement matters. One mistake in the complex notice-serving procedure can be very costly in terms of money and time. You should negotiate the charges and be wary of hourly charges without a cap. Members of ALEP will usually give you a ballpark figure for all costs during a free initial consultation. In rare cases you may not come to an
agreement with your freeholder and your case needs to be referred to the Leasehold Valuation Tribunal. This will be costly and is best avoided by both parties since they pay their own legal costs.
In order to know how long is left on your
lease you will need to see a copy of your Leasehold Title. This document will show the date that the lease was granted. It will also state the term of the lease. It can be for 99 years, 125 years or in some cases, even 999 years. Many sellers leave the job of extending
their leases to the last minute. If you are thinking of selling it is much better to have a lease extension in place than for your potential buyers to see either that it needs doing (and they will expect you to pay for this if not actually undertake it) or have to take on board this cost and effort.
How mucH will it cost to extend tHe lease? In essence the shorter the time left on a lease, the less a property is worth and thus the more it will cost to extend it. Because banks will seldom lend on properties with unexpired leases shorter than 75 years it is a case of ‘when’ not ‘if’ when it comes to paying for your lease extension (unless you never want to remortgage or only want to sell to the tiny market that is cash buyers) There are two broad ways of gaining a
lease extension – statutory and informal. Undertaking the statutory route involves
using Section 42 of the Leasehold Reform, Housing and Urban Development Act 1993. Section 42 gives you a right to a 90-year extension to your lease (note, this is
54 MARCH 2011 PROPERTYdrum
PLUS 90 years not UP TO 90 years, a common confusion), reduction of your ground rent effectively to zero and the pricing mechanisms are outlined in law. If you have time you can strike a bargain
via the informal route. For example, you may just want a 20-year lease extension so you can more easily sell the flat. You might agree to a big rise in ground rent and thus the premium you agree might be around one third of going the statutory route. If you want to extend a lease in a hurry,
the statutory route is out and then you will find that you are at the mercy of the freeholder. You need to extend the lease in order to sell the flat, they don’t care when they sell you the lease extension. This is not a great negotiating position but one in which leaseholder find themselves all too frequently. There are broadly two groups of charges
to lease extensions: the premium paid to the freeholder and all the other charges. The premium is calculated based principally on the amount of ground rent you pay to the freeholder, the length of the lease and ‘unimproved’ value of your property. The premium can range from a few hundred for long leases on cheaper flats to hundreds of thousands on expensive flats with a dozen years on the lease. We won’t go into the technical detail here but it is important to note that an element is added to the premium called
The premium for a leasehold
extension can range from a few hundred pounds on cheaper flats, to hundreds of thousands for expensive homes.’
wHat if my freeHolder does not want to extend tHe lease? If the informal approach to extend the lease fails, then you can undertake the legal route. Ultimately the freeholder must sell you a lease extension and they simply have no choice, assuming your circumstances comply with the requirements of the law. Sometimes the freeholder does not
respond attempts to contact them. It is surprisingly common for leaseholders of residential property to contact their freeholder and to receive no reply. When you serve the Initial Notice, they are likely to be much more forthcoming because they are legally obliged at that point. If you know the name of the freeholder
and some other details you may still not have the contact details. Possibly the
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