James Godden is a solicitor at GBLF and heads up the Leasehold Property division. Here he gives some tips if you're looking to relocate and are leasing a property or want to sell.
I have a short lease on a property which I want to extend,
what should I do?
Leasehold flats and houses account for a significant proportion of the UK housing stock. Typically such leases are granted for a term of 99 or 125 years. As the years pass by inevitably properties devalue and may become less attractive to purchasers, particularly where the purchaser requires mortgage finance. This is not the end of the world and it is important not to make a rushed decision.
In principle, buyers should not be deterred from purchasing leasehold property provided the price paid reflects the value of the lease at that time, and the costs of either extending the lease, or, in the case of leasehold houses, purchasing the freehold.
Whether you have a short lease on a flat or a house, legislation exists to offer a cost effective solution. In the case of a flat, the Leasehold Reform, Housing and Urban Development Act 1993 serves to grant qualifying leaseholders an extension of 90 years in addition to the current unexpired term. So, if you have a lease with say 50 years remaining, a claim under this statute will increase your total lease term to 140 years. In the case of a house, the Leasehold Reform Act 1967 serves to enable qualifying leaseholders to purchase their freehold.
What will it cost me and how
long will it take?
The essential costs are professional fees and the professional fees of your freeholder together, with the premium payable. Both pieces of legislation require leaseholders to meet the reasonable costs of their freeholder.
When considering the premium payable, too often leaseholders contact freeholders and their managing agents without additionally taking professional advice. It is vitally important to obtain valuation advice from a Chartered Valuation Surveyor qualified to advise on matters of residential leases (i.e. enfranchisement) before committing to extending your lease or acquiring the freehold. It is impossible for leaseholders to make an informed choice when considering sums proposed by freeholders. A Surveyor may be able to negotiate the premium directly with the freeholder without having to utilise the enfranchisement procedure.
The process for extending a lease or acquiring the freehold are very similar. Typically these take between six to eight months to resolve.
I need to sell my property quickly,
what should I do?
In this instance leaseholders should immediately seek professional advice prior to telling their freeholder that they are looking to sell, as they may increase the premium they require. Legislation enables qualifying leaseholders to transfer their qualifying legal rights to a purchaser. You will begin the process of extending your lease or acquiring your freehold but can transfer your criteria to your purchaser by way of an assignment. Time should not be an issue.
