Leasehold Enfranchisement and Lease Extension Valuations and Negotiations

Background:

Under certain circumstances as a leaseholder of a house or flat you have the right to purchase an extension to your existing lease or to purchase the freehold from your existing freeholder referred to as enfranchisement. In the case of flats this right to enfranchise exists in common with other leaseholders to purchase the freehold collectively. 

This is an important right that originally applied  to houses only under the terms of the Leasehold Reform Act 1967. The rights were later extended to cover leaseholders of flats by virtue of the Leasehold Reform Housing and Urban Development Act 1993 and these rights have now been further extended under the terms of the The Commonhold and Leasehold Reform Act 2002.

A property lease is a wasting asset and as its term reduces so does its value in real terms. The extent of this is not fully appreciated in the early years of the lease as the decrease in value is generally more than adequately compensated for by its increase in monetary value on account of property price inflation. However as time passes this does become more of an issue and when the term reaches 70 years or less it becomes more difficult to obtain a mortgage on normal terms and this has the effect of reducing the value further.

As would be expected, the shorter the lease the greater the cost of extending and it is therefore strongly recommended that action should be taken sooner rather than later if you are intending to stay in the flat for any appreciable length of time.

Service:

• I can provide a valuation report explaining in general terms your rights as they exist under the terms of the 2002 Act and give an indication as to the amount that I consider it would be reasonable to pay in order to extend your lease or collectively purchase the freehold with other leaseholders in the block.
• If agreement cannot easily be reached with the freeholder I can negotiate with the freeholder or his surveyor on your behalf. Ultimately if agreement cannot be reached I can present your case to the Leasehold Valuation Tribunal. 
• If your lease is relatively long at the present time it may be possible to protect its future value by negotiating with the freeholder now at relatively little cost.
• On the other hand if the length of your lease is fairly short to the point where its value has already been seriously affected action should be taken to maintain its value and protect its future saleability.

For further information about the legislation and the procedures involved visit: www.lease-advice.org.uk