Extending a lease or collectivity purchasing the freehold can sometimes be a daunting prospect for many leaseholders. Here at MAP we are actively involved in negotiating lease extensions and collective enfranchisement claims. We represent both leaseholders and freeholders agreeing lease premiums for both informal and formal claims working closely with legal professionals to offer our clients the best possible service.
The Leasehold Reform, Housing and Urban Development Act 1993 (as amended by subsequent Acts) allows leaseholders to exercise their right in order to obtain a 90 year extension to the current unexpired term with a peppercorn ground rent. Certain legal criteria must be adhered to for a leaseholder to qualify. The act allows a leaseholder to add 90 years to what is left on the existing lease at a peppercorn ground rent.
The formal route involves the service of a Section 42 Notice under the Leasehold Reform, Housing and Urban Development Act 1993 after first obtaining a valuation of the proposed lease extension cost. The Landlord is entitled to a premium (the price) for the lease extension based upon a formula set out in the Leasehold Reform, Housing and Urban Development Act 1993. Eligibility will need to be checked against the qualifying legal criteria in order to exercise such right under the Act. The competent landlord must also be identified and confirmed so that the notice is served upon the correct party. The leaseholder will need to instruct professional advisers, namely surveyor and solicitor.
It may be possible to negotiate a lease extension with a Landlord direct, this is known as an informal agreement. There are no set rules with an ‘outside of the Act’ agreement and the landlord could refuse to extend your lease as they have no obligation to do so. If the landlord is willing to propose informal terms, they may offer a shorter lease length than what the leaseholder is entitled to under the Act and they may retain/increase the ground rent as an associated term.
Both the formal and informal route will require legal representation. MAP can provide expert advice in respect of the valuation and liaise with the legal representatives to provide the client with clear guidance throughout the process.
The announcements of the Housing Secretary made in January 2021 regarding the proposals signals the government’s plans on leasehold reform. The government has stated a number of methods to reform the current leasehold reform system. The next parliamentary session which begins this spring will discuss the proposals. The legislation will need to be voted on and if successful the bill will be passed through the House of Lords and be implemented in law.
The purpose of the reform is to enable leaseholders to either extend their lease or purchase their freehold easier. Proposals include relaxing the qualifying criteria, extending leases for 990 years instead of additional 90 and abolishing marriage value. At present it is not possible to assess the impact on values as these amendments are not yet law nor do we know what challenges the new proposals will be met with. However the fact remains that a leasehold properties value will still diminish regardless
MAP Surveyors can guide both leaseholders and freeholders through the process in regards to the valuation along with working closely with legal professionals in order to serve the best interests of the client.
Please feel free to contact MAP if you have any questions regarding the current legislation and the proposed changes.
Our geographical area of coverage extends throughout central and outer London and the Home Counties. If you require lease extension or collective enfranchisement advice from MAP Surveyors, please contact us and one of our Chartered Surveyors and RICS Registered Valuers who specialise in Lease Enfranchisement valuations will be more than happy to help.
For further information please see https://www.ricsfirms.com/media/1248/lease-extension-factsheet-2019.pdf
MAP Chartered surveyors www.mapsurveyors.co.uk