THE
LEASEHOLD
ADVICE
CENTRE
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General Information:
The
Leasehold Reform Housing and Urban Development Act 1993 (as amended)
is legislation which provides an opportunity for an additional term
of 90 years, at a peppercorn rent which is basically the same as
being rent free. The additional 90 years is plus the present
unexpired term.
It could be that you are having problems trying to sell your
flat due to the length of term remaining or maybe have a clause
which permits a significant rise in the ground rent. This could
be based as a percentage of the value of the property which
could make the Ground Rent rise to hundreds of pounds in itself
significantly effecting the value / saleability of your
property. Even if you are buying a flat with a short lease it
may be possible for the current owner (assuming they meet the
qualification requirements) to serve & register the Initial
Notice & then transfer this right to you so that you do not then
have to wait the two year period before you can apply for an
extension.
A number of landlords try to either ignore a direct request (we
presume that as the lease is continually decreasing in length,
the cost of the extension is potentially increasing) or offer
shorter extensions & increase the ground rent from the amount
presently payable in the process. Often people do not appreciate
quite how much a Landlord will receive over the term where a
ground rent is still payable. As an example, say you have a
lease with 78 years remaining & the Landlord agreed to an
extension so the lease was in total 99 years but included a
ground rent of say £250 per annum, doubling every 25 years. This
would relate to a staggering £91,750 in ground rent alone!!
Furthermore, you would only be getting a 21 year extension
when you could be entitled to a 168 year lease & not pay any
ground rent. Therefore there really can be a vast difference
between in a 90 year extension in addition to the remaining
unexpired term at a nil ground rent, but a Landlord is only
obliged to grant this where a formal Notice is served upon him &
not simply by an informal request.
In addition it is not uncommon for some Landlords to require
money ‘up front’ for a ‘valuation’ which, in my personal opinion
is not generally recommended. We regularly hear from clients who
have paid a Landlord or their agent for a so called ‘valuation’
only to find that they do not get a copy of the valuation itself
and or the terms of the new lease are for a shorter time than
the entitlement, often with an increased ground rent payable
which would not be in accordance with the legislation!
You cannot extend your lease if the landlord is a charitable
housing trust and the flat is provided as part of the charity's
functions, or if :- the building in which your flat is located
is within a cathedral precinct, or if it is owned by The
National Trust. Crown properties are also excluded; although the Crown is not bound by the legislation the Minister
has stated to the House of Commons that the Crown will be
prepared to comply with the principles of it.
We provide a very
full & substantive service for clients and do not simply provide
a 'DIY' type paper pack where leaseholders end up doing a lot of
work themselves. We would also make the point that in our
opinion the various procedures, especially preparation & service
of Notices should only be carried out by experienced
professionals who specialise in the field as it is not
uncommon for claims to fail & for leaseholders to be liable for
costs where the procedures laid out in the legislation have not been
complied with adequately. See below /
contact us for further
information.
Qualification Requirements &
Eligibility;
To
be a Qualifying leaseholder you must own a ‘long lease’, and have
owned it for the past two years and not be a business or commercial
tenant. You do not need to have lived in the property for this
period, merely owned the lease for two years or more.
A ‘long lease’, by definition, is:
-
A lease of a term of years absolute in excess of 21 years when
originally granted – The present unexpired term is not
relevant;
-
A shorter lease which contains a clause providing a right of
perpetual renewal;
-
A lease terminable on death or marriage or an unknown date
(including the so-called "Prince of Wales" clauses);
-
A leaseholder having held over at the expiry of a long lease,
and the landlord has not served a notice terminating the
tenancy;
-
A shared ownership lease where the leaseholders' share is 100%
Once the Tenant's Initial Notice has been served it may be assigned
with the lease when the flat is sold. This way the present owner
(leaseholder), assuming they meet the qualification requirements
etc. can serve the notice and then sell the flat with the benefits
thereof. The purchaser will be able to proceed with the application
immediately, without having to meet the two years ownership
qualification. This can be of assistance especially where a
purchaser does not want to wait for them to become 'qualifying' and
/ or where a present short term of lease presents mortgage
difficulties.
Important Further
Information;
Subject of course to the qualification requirements being met,
Leases can be extended on an individual basis & therefore there
is no need or requirement for others in the block to extend
their lease at the same time. We have come across a number of
Landlords who when approached try to argue that every flat must
extend at the same time but this is not the case.
We would also point out that in some cases there is what is
known as a 'Head' or 'Intermediate Lessee' as well as the
Freeholder. In such cases it is not uncommon for the Head Lessee
to have a lease of only a few days longer than the actual lease
on the property & a number of flat owners therefore think they
cannot obtain an extension. This is incorrect & where the
qualification requirements are met the Lease can still be
extended by an additional 90 years as in such circumstances it
will be the Freeholder & not the Head Lessee who grants the
extension.
Although it is not a legal requirement, we would recommend
a Valuer who can provide their professional opinion as to the
reasonable premium for the new lease. This is part of the service we
can provide & although you will require a solicitor to deal with the
basic conveyance of the new Lease, most other services we provide
for you.
You
should bear in mind that;
We do not make any charge for checking your qualification
entitlement. We will carry out the required searches at the Land
Registry & (where appropriate) at Companies House, following
which we will prepare & serve the ‘Notice of Claim’ for you, strictly
in accordance with your instructions regarding the amount
proposed by way of premium & any amendments that may be
required. We would provide a copy of Part 1, Chapter II of
the Act itself, together with a fully detailed & descriptive
manual detailing in simple easy to understand terms exactly what
the process is from beginning to end. We would request from you
the basic information needed for us to prepare the necessary
paperwork, which would included a copy of your lease, the amount
you propose to offer etc. Our fees for the for an independent
valuation by an experienced fully qualified Valuer who
specialises in dealing with Leasehold Reform, together with preparation and
service of the Initial Notice Of Claim are fixed so you know
exactly where you stand from the outset. We do not
charge an 'hourly rate' & all fees are clearly specified in
writing, are entirely 'fixed' with no extras or additions in any
way. Upon instructions, we will send you a form to provide us
with the basis information required. Initially, we will
automatically check your entitlement / qualification strictly
based on the information you have at that time supplied to us
without charge. Should, for any reason we consider, based upon
the information you have initially supplied to us that you do
not qualify then, at that specific point then no charges will be
made whatsoever.
If the
amount proposed in the Notice of Claim were refuted, then, upon your
instructions, we may be prepared to negotiate with the Landlord
and if that were to fail, make an application to The
Leasehold Valuation Tribunal on your behalf, although further
fees would be payable. We naturally are unable to guarantee any
application as neither being successful nor the amount of the
eventual premium that may be determined by the Tribunal. You
will be liable for the ‘reasonable’ costs of the Landlord
relative to the Notice of Claim & the preparation / completion
of the new lease. Please
ensure you carefully read our
Terms & Conditions to
which this website & our services are subject
You
will be liable for the ‘reasonable’ costs of the Landlord relative
to the Notice of Claim