Tags: Property, Local Community, Midsomer Norton
If you own a flat, you almost certainly own a lease rather than owning the property outright. Such leases are often for very lengthy terms, when the flat is first sold, but of course, as time passes, the remaining term is reduced. It’s important to check how long your lease has left to run, and to consider whether it would be wise to extend it. If you are thinking about selling a flat, this may be something which needs to be done before you go ahead
Jan Woodland, FDC Law’s expert of leasehold properties, explains why:
The shorter your lease, the harder it will be to sell or mortgage your property. The Council of Mortgage Lenders (the body which governs all residential lenders) handbook specifies that lenders will not freely lend on leases shorter than 80 years, so if your lease is close to that length, a buyer may be unable to get a mortgage.
If you do find that your lease is getting short, it is possible to extend the term. If you have owned your property for over 2 years, you have a legal right to extend the lease (this is known as a Statutory Extension). If you have owned for a short period, the lease can be extended by agreement with your landlord.
If you have owned the property long enough to have a statutory right to extend your lease, there is a specific process to follow. This involves getting a formal valuation (specifically for the purpose of lease extension) from a specialist surveyor, to determine how much it would be reasonable to pay the landlord for the extension of the lease (this is normally known as the Premium) .
Working out the right Premium is complex – it involves calculating the loss to the landlord of any ground rent he would otherwise have been entitled to, and the loss of value in the property because it will be longer before the property reverts to him (or his heirs) at the end of the lease. Because if this, it’s very important that the valuation is done by a surveyor with experience in this specialised type of valuation.
The next step is to serve a formal Claim Notice on your landlord. This is a technical document and it is important to get it right, as if it contains any errors your claim will fail, and you must then wait another year before you can restart the process, so it is very important to get expert legal advice to make sure that every step is completed correctly.
Although it’s not uncommon for leaseholders to want to extend their leases, many conveyancers and property lawyers are unfamiliar with the process, and don’t offer this service. At FDC Law we are familiar with the process and are confident in managing it for you, to ensure that all of the appropriate steps are taken to get the outcome you want.
Once you have served your landlord with the Statutory Claim Notice, they have 2 months to respond. It’s common for them to serve a counter notice, and for there to be negotiation about the level of Premium to be paid. If no agreement can be reached, then an application can be made to the Property Tribunal, which can determine the appropriate Premium.
Once agreement is reached, the Premium is paid, an extra 90 years is added to the lease (so if the lease had 83 years to run when you applied, the new term would be 173 years) and the new term is registered at the Land Registry.
As well as the Statutory right to extend, it is also possible to form a contract with your landlord to extend the lease. Obviously this needs both parties to agree, but if your landlord is willing, the lease could be extended without having to wait until you have owned the property for 2 years. Landlords may try to negotiate a higher premium in these circumstances, and it is always sensible to get advice from an expert surveyor to ensure that you don’t pay more than is reasonable.
If you are interested in extending your lease, please contact Jan Woodland on 01373 463311 or [email protected] for more information.