What is a leasehold property?
If you buy a property on a leasehold basis, you are buying a house or flat for a certain number of years, after which the property reverts to the freeholder, unless the lease can be extended.
Both houses and flats can be leasehold, although leasehold houses are much rarer, and the government has committed to ensuring that nearly all new-build houses will be freehold in the future. When buying a leasehold property, the key thing you will need to know is how many years are left on the lease. If there are less than 80 years to go, it can be difficult to obtain a mortgage to purchase it. It is also important to understand what other costs, such as ground rent and service charges, you will be legally responsible for.
Why extend a lease?
Lease extension is necessary because the value of a leasehold property will reduce over time as the outstanding term reduces. A property with a lease of less than 80 years will become difficult to sell or remortgage. However, the law gives leaseholders the right to extend their lease once they have owned their property for two years. If they have a long lease (more than 21 years when first granted), they can extend for a further 90 years, which is added to however many years are outstanding on the original term.
Our comprehensive lease extension service
If you’re considering extending your lease, then it’s very important to get the legal advice from specialists with extensive experience and familiarity with local landlords and management companies. You’ll also need professional help from a surveyor who regularly values leases, in order to establish a realistic ‘premium’ to purchase the extra years you need.
Due to the niche expertise that lease extension requires, our lease enfranchisement specialists work separately to our Residential Property team, ensuring they can focus all their attention on achieving the best results for leaseholders. We understand that leaseholders can feel daunted by the process, which is why we assign all our clients one solicitor, who will stay with them from start to finish, keeping them updated throughout. To help our clients manage their costs, we establish our fees at the outset and work to keep costs down at all times, as we understand that extending a lease is already very expensive.
We can assist leaseholders with:
- Advice on how to proceed with a lease extension
- Negotiating with the freeholder to get the legal process underway
- Getting their lease valued
- Agreeing and completing all the formalities surrounding the execution of the new lease.
We also advise and assist clients who wish to purchase the collective freehold, whether individually or as a group of tenants. To find out more, please visit our page on collective enfranchisement here.
Proposed changes to the leasehold system
In January 2021, the Secretary of State for Housing, Robert Jenrick, announced that leasehold reform was imminent and would be achieved through two pieces of legislation. The first, The Leasehold Reform (Ground Rent) Bill, made its debut in the House of Commons in May 2021 and will fulfil the commitment to “set future ground rents to zero”.
It is not known when further legislation will be introduced, but proposals include, among other things:
- Reforming the valuation process used to calculate the cost of extending a lease/purchasing the freehold
- Abolishing ‘marriage value’ (this is a fee paid to the freeholder when extending a lease with less than 80 years outstanding)
- Giving leaseholders the right to extend their lease for a term of 990 years.
Get in touch
To see what our lease enfranchisement experts can do for you, please contact us on 0203 871 0039 or email email@example.com.