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Lease Extension and Freehold purchase
Leasehold properties, are a common form of property ownership in the UK. Typically leases are originally granted for 99 years, or sometimes 125 years. But many owners of this type of property are unaware of the importance of maintaining the length of their lease. This is due to the fact that a short lease will be difficult to sell. Mortgage lenders will often refuse to lend money for the purchase of leases that are less than 75 years left to run.
But it is also the case that cost of extending the lease will exponentially cost more the shorter it becomes.
There are two distinct ways that a lease extension can be achieved. Either the landlord and Tenant reach a voluntary agreement between themselves as to what the terms will be, which known as an "informal" or "non-stuatutory" lease extension.
Or alternatively, the Tenant may be able to exercise their legal right to claim a lease extension from their landlord, whereby those terms are determined by the laws contained in the Leasehold Reform Housing and Urban Development Act 1993 (the "1993 Act").
Freehold property is a form of indefinite ownership, in other words, the owner has that freehold interest forever. In a case where a Freehold building contains Leasehold flats within it, those flat owners have particular rights to be able to purchase that Freehold.
There can be a number of advantages in doing so. Firstly, owning the freehold afford these leasehold owners with the ability to vary their leases at their discretion, and in practice this is most often seen by the changes of those leases to 999 years in length.
Often buying the freehold will often have the secondary benefit of the acquisition of managerial control over the running of the building. However, that is dependent on whether the legal entitlements rest with the landlord.
If the leaseholders within the building wish to purchase, then it may be possible providing at least 50% of them form a group. This is known as "collective enfranchisement". It is a means by which those leaseholders can compel the sale of the Freehold to them on the terms that are governed within the 1993 act.
If on the other hand, the Freehold has been offered for sale by the Landlord voluntarily, then regardless of who is purchasing, the leaseholders who own the flats within the building have pre-emption rights. In other words, the Landlord must offer the sale of the building to all the leaseholders first, and he breaks the law, if he does not do so. This is known as "the Right of First Refusal".
Whether you extend your lease or purchase the Freehold there is legislation that sets out a formal procedure which would be considered in each circumstance. There are certain exceptions to ones eligibility and the legislation can be complex, which is why we would recommend that those thinking of embarking with such endeavours should seek proper legal advice from those who specialise within this field such as ourselves. It is only through our commitment to our specialism that we are able to achieve the best possible advantage for our clients.
We advise both landlords and tenants (commercial and residential) on their respective rights under the legislation. We advise companies, individuals as well as groups of individuals throughout the UK. We are able to advise and act for you regardless of your location within the UK. It is not necessary for you or your property to be local to us as many clients now prefer to be contacted electronically or by telephone. You will most likely require a Surveyor in these types of property claims and should you require it we are able to put you in touch with recommendations for specialist surveyor in your area.
Why Choose Judge & Priestley ?
Undertaking these courses of action can be a significant step and investment. We understand the importance of meeting the statutory deadlines and our experience in this area enables us to obtain the best outcome for you. Specialist advice on these matters is difficult to obtain, and we are proud to be able to offer quality guidance whether you are located close to our offices or not.