A flat owner’s statutory right to extend his lease by 90 years – thereby increasing the value of his flat – has been around for over 20 years. The current London property market is surging in value almost 20% annually and flat buying is as popular as ever – now accounting for 23% of all properties owned. This plus relatively low lending rates make it an ideal time for flat owners to take full advantage of this right and to invest in properties they already own.
The incentive to invest now is even greater if your Lease is approaching 80 years left to run, as the cost of a lease extension increases considerably if the Lease has less than 80 years. In practice, not extending a lease that is approaching 80 years left is not a commercially sound option – as some lenders are very reluctant to lend on such leases, which is likely to adversely affect your ability to sell.
If you are interested, and the relevant criteria are satisfied (such as your having owned the flat for at least 2 years) the next questions are usually;
How much will it cost?
The price payable for your lease extension will include a) a premium to your landlord (on which specialist valuation advice should be obtained) b) the reasonable costs of your landlord and c) your own solicitor’s and valuer’s fees.
How do I do it?
The 1993 Leasehold Reform and Urban Development Act is complex. It sets out the procedure for exercising your right to a lease extension, including serving various notices etc. Sometimes, it’s possible to avoid serving formal notices, if you and your landlord agree, although any informal negotiations should not drag on too long to avoid the price for the lease extension rising. It is crucial that the statutory procedures, if exercised, are followed correctly; there are many deadlines and requirements to comply with to make sure the right is not lost.
There are also several other issues which may be relevant and require consideration such as correctly identifying your landlord, if your landlord is missing, dealing with your mortgagee, to name but a few.
What do I do if my landlord and I can’t agree on the price?
In this event, you either try and do a deal and compromise on your figures, or make an application to a specialist tribunal which decide what the price should be.
How long will it take?
If the parties agree the figures, the process of getting the new Lease signed up and registered at the Land Registry will usually take 2-3 months. If the parties can’t agree, and there are protracted negotiations, and possibly an application to the Tribunal, the process will take considerably longer – although the crucial valuation date for the lease extension will be the date the flat owner served his notice.
If you are interested in knowing more about this process, on a “no obligation” basis please contact Lisa Ginesi at Carter Lemon Camerons solicitors on 0207 406 1000 or at email@example.com