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Act now if you’ve only 80 years left on your flat lease

Anyone who owns a leasehold flat with approaching 80 years left on the lease should act quickly to renew it if they want to avoid unnecessary additional costs says Michael Denmead, Commercial Property Partner at Barr Ellison Solicitors, who have brought out a free ‘lease extension legal pack’ to help anyone in this position.

“The law states that a qualifying leaseholder can be granted a new lease for an additional 90 years from the expiry of their current lease and reduce the ground rent to zero“ explains Michael. “But what a lot of leaseholders don’t realise is that if they leave it to fall below 80 years the cost jumps because the freeholder is then entitled to a share of the increase in the value of the flat should the lease be extended.”

So who can extend a lease and how do you go about it? Leaseholders have a right to extend their lease if the property is a flat and if they have owned it for at least two years with a lease exceeding 21 years. There is no need to live in the flat. Once your solicitor has established that you qualify a notice can be served on the landlord. Explains Michael: “Once the notice has been served the landlord has two months to respond. Usually, the landlord serves a counter-notice, accepting the right to a lease extension, but disputing the terms. The landlord can also dispute the right to the lease extension but this would be most unusual.”

Where the landlord disputes the terms, this is most frequently focused on the price to be paid by the tenant. Further negotiations are required until an amount is agreed upon, failing which either side can apply to the Leasehold Valuation Tribunal (LVT) to make a ruling on a fair price for the lease extension. “There are fixed time frames for each stage of the process from serving the notice to the right to the new lease being granted, so it’s vital that leaseholders are well prepared,” adds Michael. “They should also be aware that as well as the cost of the lease they will have to pay the valuation and legal fees of the landlord as well as their own.”  A rough idea of how much a lease extension will cost can be found by using the calculator on the Leasehold Advisory Service website www.lease-advice.org.uk.

Adds Michael:  “This might seem like a large expense but a longer lease will enhance a property’s value and make things easier if the leaseholder wants to sell or remortgage. So even if you’ve 82 years left on the lease it’s worth looking into this issue now to allow time to deal with the extension claim.”

Barr Ellison’s free ‘lease extension legal pack’ can be downloaded at http://www.barrellison.com/private/lease_extension_pack.php.  For further details contact Michael on 01223 417200

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