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Druces Private Wealth
Druces Private Wealth
Most residential flat owners have the right to extend their lease, subject to meeting a number of criteria. For those who are eligible, the right is very valuable; detailed advice on your particular circumstances is always required.
There is a similar right to extend the lease of house but it is more common in that case to acquire the freehold wherever possible. See Enfranchisement of a Leasehold House.
The qualifying criteria
The main criteria are:
• The flat must be held under a long lease (i.e. granted for a term of more than 21 years)
• The flat must have been owned by you for more than 2 years
Note that that there are a number of exceptions to these rules.
Why should I extend my lease?
As the remaining length of a lease decreases, so does its value. In particular note that:-
• If a lease has less than 80 years remaining, when you extend it, as part of the price you will have to pay a “marriage value” to the landlord. This could be significant.
• You may encounter difficulties if you want to sell your flat when the unexpired term is less than what is regarded as mortgagable by most lenders. Lenders are generally looking for at least 60 years. (Special considerations apply to flats in certain prime Central London areas).
Another way of extending is to co-operate with other flat owners in your building to exercise the right to collective enfranchisement. Once the freehold has been acquired, an extended lease is granted to the participators – see Collective Enfranchisement. However, there may be cases where this is not possible or desirable.
Length of lease and other terms
The extended lease will be 90 years, plus the unexpired term of the existing lease. There will no longer be an obligation to pay ground rent which will be reduced to a peppercorn.
Generally, the other terms of the leased are unchanged. Sometimes a landlord will want to ‘modernise’ the lease (which normally means making changes in their favour and these changes can often be opposed).
What happens if the Landlord disputes my entitlement or the price?
In most instances the only matter in dispute is the price. This is usually resolved by negotiation between the valuers for each party. Where disagreement remains, a dispute as to price can be referred to the First Tier Tribunal.
Timing of new lease
The new lease is generally granted after two years. However there is one way around this. If you are in the process of buying a flat (and the seller has owned it for more than 2 years) they can serve a claim notice and then transfer the rights to you when you complete the purchase. The seller will probably want their costs paid and there are other issues to consider, so specialist advice is
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