Leasehold extension and enfranchisement explained
The law gives leaseholders of residential property two distinct rights firstly the right, together with their fellow leaseholders to acquire the Freehold of the property and secondly the right to extend the Term of their leases.
If you purchase a leasehold property you do so for a fixed period that is stipulated in the lease, this is known as the “Term”. When the Term ends, the ownership of your property reverts to the landlord.
The remaining Term of a lease affects the value of the property: the shorter the lease, the less the property is worth. So, it is in your interest to either extend the Term of the lease or acquire the freehold before.
The Relevant Law
The Leasehold Reform Act of 1967 recognised the problems faced by those who owned leasehold houses and were anticipating the end of their lease term. The Act gives leaseholders the right to purchase their houses and acquire the freehold from their landlords, at a price that is fair and reasonable to both parties.
The later Leasehold Reform, Housing and Urban Development Act of 1993 gave flat owners the right to extend their lease or buy the freehold.
Additional reforms, such as the 2002 Commonhold and Leasehold Reform Act awarded extended the existing rights and introduced a new Right to Manage .
The government is due to shortly issue a White Paper that is anticipated to propose further reforms to make the process easier for leaseholders
Leasehold enfranchisement and extension valuation and process
How much does the process cost? The valuation process is rather complex and depends on a host of factors and should be carried out by a specialist valuer. Once you have your valuation your lawyer will prepare a form of notice for service on your landlord which gets the process going, following this it entails the receipt of counter notices and thereafter negotiation and agreement of terms, all of which have prescribed deadlines. For this reason, it is a good idea to find professionals who are experienced in this area of work , starting with a specialist solicitor and a valuation surveyor. They will work for you to ensure you get the best terms possible.
The firm is also a founding member of the Association of Leasehold Enfranchisement Practitioners and features in the News on the Block experts directory.
For further information on extending your lease, buying the freehold or exercising your right to manage call Guy Osborn or Shilpa Mathuradas who will be happy to answer your questions.