The Leasehold Reform, Housing and Urban Development Act 1993, (The 1993 Act) gives the right for a leaseholder to extend their lease, subject to being a qualifying leaseholder and having a qualifying lease, there are various conditions that have to be met, however one of the most important is that the leaseholder has owned the flat for two years prior to making a claim.
A statutory Lease Extension provides a further 90 years on top of the existing remaining term, and reduces the ground rent to a peppercorn from completion of the lease extension throughout the term.
For an indicative value, try our:
We’re a firm of experienced, expert Chartered Surveyors and Valuers and also members of the Association of Leasehold Enfranchisement Practitioners, the prominent industry body for surveyors, solicitors and barristers practising in this specialised area.
Whilst the majority of our instructions are within Greater London we work throughout England, an inspection of the property is not always required, however on occasion it may be considered crucial, if for example there is an unusual or complex matter, and in the case of short leases.
We regularly Act for Freeholders and Leaseholders.
Lease Extensions – a brief overview
Lease Extensions can be arranged on a voluntary (informal) or statutory (formal basis). When the Lease Extension is arranged voluntarily, the terms of the extension and the premium are agreed between the freeholder and leaseholder, on occasion this will be the most suitable way to extend the lease.
Statutory lease extensions are those carried out under a lessees rights as provided by the 1993 Act.
Premium
The premium is calculated by a prescribed formula. The premium is derived by calculation the reversionary value of the property, the loss of ground rent, marriage value when applicable and compensation to the freeholder where applicable. However, tenants improvements are to be disregarded.
Whilst the formula is prescribed, it is common for leaseholder and freeholders to disagree on key inputs resulting in a vastly different premiums.
Costs
When a leaseholder serves a s.42 notice to extend their lease, they also become liable for the freeholder’s reasonable costs, usually those of the freeholder’s solicitor and surveyor. In addition the leaseholder will also have their own legal and valuation fees to consider.
Negotiation
It is common for surveyors of the freeholder and leaseholder to be instructed to negotiate the premium with a view to coming to an agreement on the amount payable to extend the lease, if the premium cannot be agreed an application can be made to the
The First-tier Tribunal
The First-tier Tribunal (formerly the LVT), has jurisdiction to determine matters that cannot be agreed between parties, including the premium and the reasonableness of the Freeholder’s costs.
The information provided is intended as a brief overview, Leasehold Reform is a complex area of law and valuation, it is always recommended to take specialist advice.
Further information:
The Leasehold Advisory Service is a government supported information service with a wide range of useful information.
If you need help or advice, call for a chat or send an e-mail.
The Lease Extension Process
s.42 notice
Leaseholder instructs a solicitor and valuer and serves a s.42 notice on the freeholder
s.45 notice
Freeholder serves a s.45 counter-notice, most usually stating a higher premium
s.45 notice
Negotiation
Surveyors for the freeholder and leaseholder are instructed to negotiate the premium
Premium Agreed, or application to the Ft-T
The premium and other matters are agreed or one of the parties makes an application made to the First-tier Tribunal (Ft-T) to have them matter determined
Premium Agreed, or application to the Ft-T
Lease Extended
The lease is extended for a further term of 90 years, at a peppercorn ground rent
