This is a complex area in which we specialize. We can assist with extending leases or purchasing freeholds. We are members of the Association of Leasehold Enfranchisement Practitioners (ALEP) and are listed on the website of the Leasehold Advisory Service.
We are also able to assist with the splitting of title if dividing a property in to more than one unit.
Forshaws Davies Ridgway LLP now offers advice in relation to leasehold enfranchisement. This term is used to describe a number of collective and individual rights which can be exercised by leaseholders. These are as follows:
- Collective enfranchisement
- Right to extend the lease of a flat
- Right to acquire the freehold of a house
- Right to a new lease of a house
There is also a further collective right which can be exercised by leaseholders and is known as the right to manage.
Collective enfranchisement
This is a right for a group of leaseholders to have the freehold and other intermediate leasehold interests conveyed to a company purchaser (in which the leaseholders are shareholders).
Having a share in the freehold may serve to make the property more attractive to future buyers and in the meantime will provide you with the power to grant yourself a long lease and reduce or eliminate the ground rent payable.
Right to extend the lease of a flat
Have you owned your property for at least 2 years? Is your lease a long lease (21 years or more)? If all the answers to these questions are yes, then it may be that you are able to extend the term of your lease by at least a further 90 years. You may wish to do this is if you only have 90 years or less remaining on the term of your lease.
If you are looking to sell your property in the future, then extending the term of the lease prior to a sale may increase the saleability of your property. Buyers will be concerned about the length of the lease and it will be to your advantage if this has been recently extended. If a lease hasn’t been extended then there is a possibility that you can assign the benefit of the notice to extend to a buyer, however if this has not been finalised prior to a sale proceeding, then the buyer may seek to reduce the purchase price accordingly.
Mortgage lenders normally require at least the mortgage term (usually between 25 and 30 years) plus 25 years remaining on the lease before they will agree to lend. This means there has to normally be 55 years unexpired.
If you have decided not to sell your property due to the current financial climate, it may be worth while taking this opportunity to improve the value of your property and it’s marketability by proceeding with a lease extension. As a general guideline, the process can take between 6 to 12 months.
Right to acquire the freehold of a house
If you own a long lease of the whole of your house and have owned the leasehold interest for at least 2 years, you may have the right to purchase the freehold of the house.
This right is generally more popular than the right to extend the lease, as according to legislation you are only allowed to extend the term of the lease by a further 50 years (which is fairly short).
Right to a new lease of a house
If successful, you could obtain a new lease for a term of 50 years from the date the existing lease expires. There is no premium payable in respect of this but you will continue to pay ground rent.
Right to Manage
If your block is badly managed or the service charge you pay is too high you may want to consider the right to manage. This is a right given to a group of leaseholders to take over the management of the building. If successful, leaseholders can take over the management functions of the landlord relating to services, repairs, maintenance, improvements, insurance and management. Having a well managed block will be attractive to buyers as it will also allow them an element of control in the process.
Please note that this right can be awarded to leaseholders without the need to prove fault on behalf of the landlord. There is also very limited scope for the landlord to hold up the process or object.
As a member of the Association of Leasehold Enfranchisement Practitioners (ALEP) and on the panel of the Leasehold Advisory Service, we are specialists in this area and are able to provide quality advice on all aspects of the procedures.
Useful websites:
www.alep.org.uk
www.leasehold-advisor.co-uk
For further information please contact...
Tim Jordan at our Stockton Heath Office
Vicki Coulthurst at our Warrington Office
