Frequently Asked Questions

FAQ groups:

22 frequently asked questions in Lease extension:

Why should I extend my Lease?

The value of the Lease decreases as the unexpired term decreases. This may seem negligible when the lease has more than 100 years to run then this decrease may be negligible but there will come a stage when it will become significant.
If your lease has less than 80 years to run, part of the price you will have to pay to the Landlord includes marriage value. This could be considerable, so it is important to protect the value of your lease sooner rather than later.

I am having trouble selling my flat, buyers think the lease is too short, what should I do?

You may encounter difficulties if you want to sell your flat if the unexpired term is less than is regarded as mortgagable by most lenders. Different lenders have different criteria but they are generally looking for an unexpired term of at least 60 years. There are special considerations applying to flats in certain prime Central London areas.

My lease has 80 ½ years unexpired what can I do I am worried about marriage value?

The main reason to press on with extending your lease sooner rather than later is that marriage value applies to all leases with less than 80 years unexpired. Get specialist advice, serve your notice to fix the valuation date whilst your lease has more than 80 years unexpired. Be absolutely sure your notice is not defective, it could cost you dearly!

Why can't I just leave things as they are?

The shorter a lease becomes, the more expensive it becomes to rectify the problem later. Costs have been known to double within a few years, particularly where lease lengths have slipped below the critical 80-year level. By extending the lease or acquiring the freehold and making subsequent lease or management changes, the saleability and value of the property will be enhanced.

I already own my flat, what is the point?

If you own the lease you do not own the flat. Leaseholds and Freeholds are different rights. When you buy a flat you buy a lease, you buy the right to reside in a part of somebodies Freehold property. It is the freeholder who owns the building, when each lease expires the flats revert to him. He can then create a new lease, redevelop etc.

Are there other ways to make my flat more attractive?

Yes, you could buy your freehold collectively with the other flat owners in your building, thisis called collective enfranchisement. See our FAQ's on Collective Enfranchisement.

Can I get financial assistance with buying extending my lease?

Probably, extending the lease will probably increase the value of your flat. Your mortgage company will more positively consider extending your loan to cover the freehold cost and any associated legal and valuation costs.

I want to add another storey to my top-storey flat. What do I need to be aware of?

Your ability to develop your leasehold property will depend on a number of permissions. (Planning, building regulations & Landlord's consent). Unless you can agree terms, the freeholder will usually be able to use the terms of your lease to prevent you from making substantial modifications to your property.
If negotiations with the Freeholder are not progressing, buying the Freehold may be an option but you would then be negotiating with all your fellow flat owners rather than the Freeholder.

What are the qualifying criteria?

The main ones are as follows but there are a number of exceptions and special situations

The flat must be held under a long lease i.e. one which was granted for a term of more than 21 years
The flat must have been owned by you for more than 2 years
There is no residency qualification, only one of ownership

How long a lease extension will I get?

90 years in addition to the unexpired term of your lease.

Will I still have to pay ground rent?

The ground rent should be reduced to a peppercorn meaning that no ground rent should be payable for the whole of the term (e.g. the 90 years plus the present unexpired term)

What happens if the Landlord disputes my entitlement to claim or we cannot agree on the price?

In most instances claims to enfranchise are resolved by negotiation between the valuers for each party. In those minority of cases where there is a dispute as to entitlement or the price cannot be agreed then the matter can be referred to the Leasehold Valuation Tribunal. This can be a lengthy and expensive process.
Although, as mentioned above, you are required to pay the reasonable costs of the landlord you are not liable for the costs of the landlord in respect of any proceedings before the LVT, except where the LVT determines that an application should be dismissed or one party has acted unreasonably in the proceedings.

I have not been able to make contact with the freeholder and no longer know where he lives. He has never collected ground rent. What do I do?

Don't worry. You can still extend your lease. You need to apply to the County Court for a decision to have the terms under which you can extend your lease referred to the Leasehold Valuation Tribunal for determination. The County Court has the power to dispense with the need to formally serve the freeholder with your Claim Notice.
The LVT will hear the case even if the freeholder remains absent and will determine fair terms for the purchase. Once the LVT determine terms, you can apply to the County Court for a vesting order transferring the lease extension to you.

How much will I have to pay?

The valuation formulae are complex but are primarily based on ground rents and yields and the length of the unexpired term. As specified above it is very important to be aware if your lease has less than 80 years left at the date you serve your Notice on the landlord you must also pay a marriage value which can considerably increase the price.

Do I need a valuer?

It would be extremely unwise not to have a formal valuation or a valuer specialising in this field. Even for negotiations you need to have an idea of how much you are likely to pay and it is necessary to specify a price in the Initial Notice. If the price is unrealistic this could lead to your Notice being declared invalid.

What other costs must I pay?

You will also have your professional costs which will be those of your solicitors and surveyors and, in some more complex cases, possibly those of a barrister. Estimates should be obtained.
Importantly, you should note that if you do serve a notice on the your landlord then you will be liable for the reasonable costs of the landlord in connection with any investigation the landlord is required to carry out, obtaining a valuation of your flat, and negotiating and granting a new lease to you.
There will also be the usual payments to third parties as with any conveyancing transaction including Stamp Duty Land Tax (depending on the price you pay), Land Registry fees and other incidental disbursements such as search fees.
As this is a specialist area any professional fees are unlikely to be cheap but we believe that we provide good value for money.
The ultimate cost will depend on a number of factors including the complexity of the transaction and how long it takes and importantly whether or not it is necessary for the matter to be referred to the Leasehold Valuation Tribunal.

Do we need a formal valuation?

No, but the statutory valuation methology is complex.

You need to know how much you are likely to have to pay even if only for the purposes of negotiating with the freeholder.
The notice served on the freeholder must state the proposed price, if you quote an unrealistic price you could invalidate the notice.
It is highly likely that the freeholder will employ a specialist valuer and the tenants will almost certainly need one to negotiate on their behalf. Appoint a Surveyor who specialises in this type of valuation.

How much do we have to pay?

It depends on

the amount and the level of ground rents
whether there are ground rent reviews
how many years are unexpired on the lease
whether your lease has less than 80 years unexpired
what the difference between the short lease value and extended lease value is (marriage value)
what the right capitalisation rate (investment multiplier) is for the postcode/are you live in
the freeholder's "reasonable" legal and valuation costs but not his costs for proceedings at the Leasehold Valuation Tribunal.
costs of serving an Initial Notice on the freeholder if he declines an informal negotiation.

My lease has 80 ½ years unexpired what can I do I am worried about marriage value?

The main reason to press on with enfranchisement sooner rather than later is that marriage value applies to all leases with less than 80 years unexpired. Get specialist advice, serve your notice to fix the valuation date whilst your lease has more than 80 years unexpired. Be absolutely sure your notice is not defective, it could cost you dearly!

How much more might it cost to buy the freehold if our leases when the leases drop below 80 years?

The simple answer is the cost of the marriage value. The difference between the short lease value and the value of the lease once you can grant yourself a share of freehold. When a lease is less than 80 years you must compensate the Freeholder on a 50:50 split for the marriage value. Marriage Value is only payable on flats of participating leaseholders.

Do we have to pay the freeholder's costs?

Yes. By law you must pay the reasonable costs of the freeholder (and any intermediate landlord) of assessing whether you have the right to claim a statutory lease extension, dealing with the tenants notice (serving counter notice), also the landlord's valuation and conveyancing work. There is still a liability to pay the costs if the tenants withdraw from the process.

What are the other costs?

The main costs will be the professional fees, namely solicitors and surveyors/valuer as well as the landlord's costs. There may also be payments in respect of the conveyancing for example Stamp Duty Land Tax, Land Registry fees and incidental searches. You should bear in mind that there are a number of variables for example whether or not is it necessary for the claim to be referred to the leasehold valuation Tribunal and whether the claim is dealt with fairly speedily by way of negotiation with the freeholder.