Leasehold ownership is almost exclusive to England and Wales.
A lease usually lasts for a term of 99 or 125 years, and leases are a diminishing asset reducing in value as the lease gets shorter over time. This means that the shorter the term remaining, the less the property is worth.
Residential leaseholders, who have owned their flat for at least 2 years, have the right to claim a lease extension from their landlord under the statute.
The right is for a 90-year lease extension on top of the current term at a peppercorn rent (nil).
It is important to exercise this right before the lease drops below 80 years remaining. Otherwise, the premium payable can rise substantially.
You can agree on informal deals for a lease extension with a landlord. However, you should consider any deal against the statutory right.
To calculate the premium is necessary to use a statutory formula. For this reason, it is important to obtain specialist valuation advice as to the premium payable.
There are also additional rights to enfranchisement.
For example, leaseholders in a block of flats have the right to club together to claim the freehold or the right. Also, an individual house can claim the freehold, as well as management rights and claims. The government has been consulting on leasehold reform. There are plans for substantial changes, that will make the enfranchisement and lease extension processes cheaper and easier.
Try out our handy Lease Extension Calculator:
If you have any questions as to the rights available, how the processes work or upcoming reforms please contact:
Trowers & Hamlins LLP
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