Extending the lease on your flat could make a sale much quicker
The property boom of the 1980’s saw many large local buildings converted into flats. In most cases they were sold on 99 year leases, meaning they often now have less than 80 years left to run.
If you find yourself in this position when you come to sell your flat, you are likely to find that a buyer will want the lease extended. Extending a shorter lease to a decent length can also add thousands to your property's marketing value.
Fortunately, most residential flat owners now have a right to extend their leases. Provided your lease was granted for more than 21 years and you have owned it for more than two years you will be able to extend your lease. This will involve making a payment to the landlord.
The procedure can be quite time consuming and it is much better to obtain an extension before you want to sell. Otherwise you will run the risk of losing a buyer because you cannot negotiate an extension to your lease quickly enough.
If the lease has less than 80 years unexpired when you seek to extend it then, as part of the price, you will have to pay an additional amount known as a marriage value to the landlord.
If you exercise your statutory right, your lease will be extended by 90 years in addition to the existing unexpired term. The ground rent will also be reduced to a peppercorn, which means effectively nothing.
The procedure normally involves obtaining a valuation of the premium to be paid to the landlord for the lease extension and then service of a notice upon the landlord claiming the right to an extension and offering to pay the appropriate price.
At that stage the landlord has the right to ask for a deposit payment of 10% of the price offered. The landlord then has two months in which to serve a counter notice agreeing your right to obtain a new lease or denying that right. Normally the landlord admits the right but disputes the price being offered. Matters are then usually settled by negotiation but if agreement cannot be reached upon the price it can be referred to the First Tier Tribunal (formerly known as the Leasehold Valuation Tribunal) who will decide the correct price to be paid.
You will have to pay your own legal and surveyor’s costs as well as those of the landlord but not the landlord’s costs involved in any tribunal proceedings.
Flat owners have various other rights. Collectively, the tenants of blocks of flats have the right to acquire the freehold of the building. Those who find the existing management of their building unacceptable also have a collective right to take over responsibility for management.
For advice contact Paul Reeves at Boys & Maughan Solicitors by email at email@example.com or by telephone on 01843 234000.