Levene Chartered Surveyors Valuations

Lease Extensions

Leaseholder's Rights

The Leasehold Reform Housing and Urban Development Act 1993 (as amended) governs the right to an additional term of 90 years over and above your existing term, at a peppercorn rent (no ground rent).

You will not, according to the act, be able to extend your lease if:

  • The landlord is a charitable housing trust and the flat is provided as part of the charity's functions.
  • The building lies within a cathedral precinct.
  • If the building is owned by The National Trust.

To 'qualify' as a leaseholder you must own a 'long lease' and have been the owner during the past two years, not as a business or commercial tenant. You do not need to have occupied for this period, simply owned the lease for at least two years.

A 'long lease' is defined as:

  • A lease granted for in excess of 21 years.
  • Leases which contain a covenant providing a right of perpetual renewal.
  • A lease that ends on death or marriage or a date unknown.
  • 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%.

If the Tenant's Initial Notice has been served it can be assigned with the lease when the flat is sold. This way the owner / leaseholder, if they meet the requirements etc. can serve notice and sell the flat with the benefit of the notice. The purchaser can then proceed with the application without having to wait the two years. This is of help where a purchaser will not wait to qualify or where a short term lease poses mortgage difficulties.

Recent court cases have decided that offers made in notices that cannot be justified in Valuation Terms render the notice invalid. A Professional Valuation is important not only to ensure that you know what you should pay but also to ensure you do not waste time and money.

The Cost of a Lease Extension

The cost of buying a lease extension will be made up of the following:

  • Loss to the freeholder of his ground rent income.
  • Loss to him of his reversion, i.e. his entitlement to the flat at the end of the existing lease, and any other loss to him (if any).
  • 50% of the marriage value. The marriage value is best defined as the increase in the value of the flat arising from the leasehold and freehold interests being combined. There is no marriage value payable on flats that have more than 80 years un-expired on the lease.

The leaseholders also have to pay the freeholder's valuation costs and his solicitor's costs. They will also have to pay stamp duty.

If a Price can not be Agreed

The freeholder may accept the offer or respond in his counter notice with his own asking price following which the leaseholder may wish to enter into negotiations to settle the premium to be paid. If this cannot be achieved then either the leaseholder or the freeholder may make an application to the Leasehold Valuation Tribunal who will determine the price payable.

Levene Chartered Surveyors Service

Levene Chartered Surveyors can provide advice on the price we believe should be fairly paid under the 1993 Act. The figure we can provide you with comes from our experience of acting on behalf of leaseholders and freeholders under the 1993 Act. It also comes from cases that have been brought before the Leasehold Valuation Tribunal. These cases give the prices paid for lease extensions on flats of various values and lease lengths in different areas. These sources of information help build up a picture, which we can apply to flats of all values and all lease lengths.

Please give our friendly staff a call on 020 8977 6886 use our contact page to get in touch.

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