Leasehold & Freehold Tenures:
If you are reading this article it is likely that you have, or are going to acquire, a leasehold title in a flat or house.
In attempting to show the interplay between freehold and leasehold, it is useful to view the freehold as being the land and the physical building structure and the leasehold being the flats therein.
Why is the number of years remaining on my lease important?
It is important for you to know how many years are remaining on your lease and when it is necessary to act.
New leases are commonly for terms of 999, 125 or 99 years. When the number of years decreases below 90 years it is very much time to explore the option to extend.
This is because when a lease falls below the 80 year threshold the cost of extending increases disproportionately.
What are the problems faced by owners of short leasehold property?
• difficulty in selling;
• difficulty in obtaining a mortgage;
• the cost of the extension itself becomes exponentially more expensive with each passing year.
What am I entitled to by law?
In the vast majority of cases you will have a legal right to renew your lease, which cannot be resisted. The principal qualifying criteria is that you have owned the flat for 2 years.
The law states that the term will be extended by 90 years, thus for an 80 year lease this will be extended to 170 years. Additionally, the ground rent will effectively revert to zero.
The process itself is set out by an Act of Parliament. This involves serving notice on the freeholder requesting an extension. The freeholder is entitled to serve a counter-notice and the sum you will eventually pay is subject to negotiation between the two parties.
The average length of the process, in our experience, from start to finish, is 4-6 months.
The Surveyor’s Role:
The surveyor plays a key role in initially valuing your property, undertaking the calculation and negotiating the level you will pay with the freeholder or more commonly its representatives. Experience shows that appointing a surveyor to act on your behalf will prevent you from over-paying and often results in a saving running into thousands of pounds.
• be aware of your lease length and remember it is rarely too early to act;
• once you have extended your lease, you will no longer need to consider this again in your lifetime;
• the value of your flat will be increased.
Meet the Lease Extension team at MAP Surveyors