The issue of Lease extensions and enfranchisement of flats and apartments is becoming more prevalent in recent years. A lease is a diminishing asset and will effectively reduce in value with each year that passes. If nothing is done then you may face a situation in which property will become increasingly difficult to sell. Under the Council of Mortgage Lenders a property may often be classed as “unmortgageable” if less than 50 years are left on the lease term.
An extension to the lease can therefore preserve the value of what for most of us is our major financial asset.
Enfranchisement allows you to take control of the day to day management of the development in which you live if you are unhappy with the current arrangements,
The law is governed by the Leasehold Reform Housing and Urban Development Act 1993 as amended by the Housing Act 1996 and the Commonhold and Leashehold Reform Act 2002.
Provided you have owned your property for at least two years you can apply for a 90 year extension to the current term and the reduction of your ground rent to a peppercorn ( a legal term for a nominal payment).
Whilst the law regarding the valuation and price to be paid is extremely complex and is based on issues known as “marriage values” and “hope values” it basically involves the capitalisation of ground rents. The appropriate place to start is with the instruction of a specialist surveyor who can give both an indication of the likely price and put forward a figure which will allow negotiations to start.
It is advisable if in doubt to act sooner rather than later. The marriage value only becomes payable when there is less than 80 years to run on the current term if you allow the term to diminish beyond this the price you are likely to pay would increase considerably!
The Act also then governs the procedure to follow and the rules as to the payment of costs.
This effectively is designed for those people living in flats or apartments within a development. It can give you power to take control of the management of the building and correct any defects that may exist in the current lease.
In order to qualify you must have the support of ½ of the owners within the development and have a lease with an original term of more than 21 years .
Again the law is governed by the 1993 Act. The procedure involves the service of a notice on the Landlord which gives the Landlord a period of 2 months to serve a counter notice. If the matters cannot be agreed it can be referred to the Land Valuation Tribunal.
Again there is a price to pay to the landlord and again valuation issues and the marriage value may be relevant.
Contact our team of Conveyancing specialists on 0800 614 722