P George and Company has acted for Landlords, Tenants and Managing Agents for
many years in leasehold extensions and freehold enfranchisement applications.
We provide a specialist service at competitive rates and will explain the
procedure in clear terms. Please email or telephone Nick Demos for a free initial
advice and estimate as to costs.
Please peruse the following sections which may be of assistance:-
WHY EXTEND MY LEASE
Leasehold properties are wasting assets and the value will reduce as the lease term diminishes. A lease extension pursuant to statute will add 90 years to your lease and you will need to make a one off payment to your landlord. We have a close network off surveyors who are able to obtain favourable valuations to assist with negotiations or applications for lease extensions.
Therefore it is imperative that the lease is extended especially if the lease in question drops below 80 years even by a day. Thereafter it becomes very expensive to extend. If therefore your lease has 80 years or more to run you should act immediately to extend your lease without further delay in order to protect your investment.
In addition if you are contemplating a sale of your flat this may be more difficult to market with a low lease and substantial discount on the purchase price may be applied to take into account the low lease being offered. Extending the lease will therefore overcome this issue and the lease should be extended before the flat is placed on the market for sale.
DO I QUALIFY FOR A LEASE EXTENSION
You will qualify if:-
(a) you have owned the flat for at least 2 years and,
(b) the term granted for the lease was 21 years or more.
GUIDE ON EXTENDING YOUR LEASE PURSUANT TO SECTION 42 OF THE LEASEHOLD REFORM HOUSING AND URBAN ACT 1993.
a) A section 42 Notice of Claim needs to be served and the process will be viewed as commenced once the notice is served on the Landlord. The Notice will state the premium that you are offering for the lease extension. Once the notice is served you will become responsible for the Landlord's "reasonable" surveyors and legal fees in dealing with the claim. These fees must be of a reasonable amount. The freeholder will usually instruct a surveyor to prepare a valuation to be able to negotiate the premium to be paid or to serve a counter notice upon the tenant.
LANDLORD'S COUNTER NOTICE
The freeholder has two months from date of receipt of the Section 42 Notice served upon him by the tenant to serve a counter notice upon the tenant stating whether he accepts the tenant's claim or whether he denies the claim and usually the freeholder will offer an alternative premium for the lease extension which is usually higher than the premium stated on the tenant's notice of claim.
AFTER RECEIPT OF COUNTER NOTICE.
After the landlord has served his counter notice the tenant will have up to six months within which to negotiate acceptable terms for the lease extension. At this point the parties respective surveyors usually assist in the negotiations and advise the solicitors of agreement reached. In the majority of cases a premium is agreed but if it is not then an application can be made to the First Tier Tribunal for determination as to what is a reasonable amount. This is very rare.
GRANT OF NEW LEASE
Once terms have been agreed a further period of four months from agreement is available to complete the lease extension and pay the premium and costs. We conduct all conveyancing procedural steps to ensure that the new lease that is granted is completed within the required time and complete the registration at HM Land Registry.
The term Leasehold Enfranchisement is used to describe the procedure for tenants of flats applying to purchase the freehold of their building. This is advantageous as it will provide leaseholders with control over such issues as service charges and repairs and in essence will be able to decide how the block of flats is manage and at what cost. Usually a company is formed to purchase the freehold and each of the leaseholders will become a share- holder or a member of that company.
WHY BUY YOUR FREEHOLD
It is not unusual for leaseholder's to be dissatisfied with the service provided and the costs applied by freeholders in management of blocks of flats. Therefore if leaseholders join together to purchase the freehold the clear advantages of doing so amongst other things would be (a) they will be able to manage the maintenance and the cost as mentioned above, (b) it will avoid the costs of unscrupulous landlords and the management problems which may occur, (c) the level of service charges should reduce and administrative costs of lease extensions or changes to leases will be easier to achieve, (d) if the tenants have short leases it may be more cost effective to buy the freehold collectively rather than each of them seeking a lease extension individually.
DOES THE BUILDING QUALIFY FOR A ENFRANCHISEMENT
Two requirements must be met for qualification as follows:-
a) The building must not be more than 25 percent non residential and
b) at least two-thirds of the owners of the flat must be let to qualifying leaseholders. This means that two-thirds must hold long leases (21 years or more) and if the building qualifies at least half of the qualifying leaseholders must participate in order to commence the procedure to purchase the freehold.
PRINCIPAL STEPS IN PURCHASING FREEHOLD
Section 13 of the Leasehold Reform Housing and Urban development Act 1993 controls the procedure for the purchase of freehold and the principal steps are as follows:-
a) INITIAL NOTICE
At least 50 percent of the qualifying tenants serve a section 32 notice. When this notice is served the tenants become responsible for the reasonable legal and surveyor's fees of the freeholder and the freeholder will invariably instruct a surveyor to inspect the building and prepare a valuation report as to the premium which he will require, this premium will be inserted into the counter notice to be served by the freeholder subsequently.
b) LANDLORD'S COUNTER NOTICE
Within two months of receipt of the Section 13 Notice the landlord must reply to that notice by serving a counter notice on the tenant or their representative. The counter notice will state whether the tenant's proposals are accepted or denied. If accepted it will usually offer a premium that is higher than the premium that the tenants have initially offered to pay as stated in the tenant's Section 13 Notice.
c) NEGOTIATION WITH THE LANDLORD
A period of six months will be available for the purpose of negotiating a premium between the tenant and the landlord but if an agreement has not been reached within that time then the tenants must apply to the First Tier Tribunal for the determination. This is very rare and invariably the respective surveyors acting for the tenant and the landlord or their solicitors will be able to agree a premium to avoid the cost of a hearing at the First Tier Tribunal.
d) ONCE AGREEMENT IS REACHED
Once the premium and terms of the Transfer are agreed there will be a further period allowed of four months to complete the conveyancing process so that the freehold is transferred to the tenant or their company and once the purchase is completed we will deal with registering the Transfer of Freehold Title to the tenants at HM Land Registry procuring title deeds evidencing the ownership of the freehold by the tenants or their company.