Nf Lease Extention Guide
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Nf Lease Extention Guide

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Northfields Estates are please to provide a their Lease Extention Guide.

Northfields Estates are please to provide a their Lease Extention Guide.
For more information, please contact us on: 020 8840 6666

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Nf Lease Extention Guide Nf Lease Extention Guide Document Transcript

  • G ie o ud TEtn ig xe dn Lae ess
  • The Northfields Quick Guide to Lease ExtensionsDo you need to extend your lease?The length of a lease has a significant impact on the value of a property so,whether you are buying or selling, it’s crucial to know where you stand.We’ve helped thousands of property owners maximise the value andsalability of their homes, so we’ve put together this guide to give you a briefoutline of how this potentially complex area works, what you need to do andwhere to go for the best advice.Can I extend my lease?Most flat owners with long leases can extend them by exercising the rightsgranted in the Leasehold Reform Housing and Urban Development Act 1993.The amendments made in the Housing Act 1996 and the Commonhold andLeasehold Reform Act 2002 should make it easier and cheaper for you toextend your lease. Your original lease must have been for a minimum term of21 years and you must have owned your lease for two years in order toqualify. The new lease adds 90 years to your existing lease and at apeppercorn rent (very small payment).How is the price for the new lease calculated?The calculations are complex and, to ensure you get a fair deal, it makes senseto use the services of an experienced surveyor. The surveyor will base thecalculation on the value of your flat, the level of your rent, and how long thelease has to run. In effect you pay: 1. Compensation to the Landlord for loss of rent payable for the remaining term of the existing lease. 2. Compensation to the Landlord for deferring the return of the flat to him by 90 years. 3. Half of what is known as “marriage value”. This is the amount by which the value of the new lease exceeds the combined value of your and the Landlord’s current interests. Marriage value is only payable where the existing lease has less than 80 years to run.Most surveyors will give you a high and low price; the final price is likely tobe somewhere in between.12 March 2008 1
  • Serving your noticeUsing a conveyancing solicitor, you serve a notice to the Landlord specifyingthe price you propose to pay for your new lease. The price must be realisticor your notice will be invalid. You must give the Landlord two months toserve a counter-notice saying whether he admits your right to a new leaseand, if so, on what terms. Your Landlord can ask you to prove yourownership of the flat and pay a 10% deposit of the sum you’ve proposed forthe new lease.The Landlord’s counter-noticeThe Landlord must serve a counter-notice by the date you specified statingwhether your entitlement to a new lease is admitted and, if so, setting out anycounterproposals for the price of the new lease.If the counter-notice denies entitlement to a new lease it must explain why.The Landlord must then commence proceedings in a county court within twomonths for a declaration that you are not entitled to a new lease.If the Landlord fails to serve a counter-notice you are entitled to apply to acounty court for an order declaring entitlement to a new lease on the termsproposed.Agreeing termsIn most cases the price and terms are agreed between lease-holder andLandlord. If you can’t agree, two months after the counter-notice has beenserved, you can apply to the Leasehold Valuation Tribunal (LVT) todetermine these matters for you.Completing the new leaseOnce terms have been agreed or determined by the LVT, you follow arelatively straightforward conveyancing process with the new lease beinggranted to you by the Landlord and being registered at the Land Registry.How long will it take?If it is necessary to have terms determined by the LVT the process will takeapproximately 10 – 12 months. Notice claiming new lease served March Landlord’s counter-notice served April Application lodged with LVT June – September Hearing in LVT October/November LVT decision received November New lease completed December/January12 March 2008 2
  • Frequently asked questions 1. What happens when the Freeholder (Landlord) offers an extension on different terms? You are under no obligation to accept and it’s seldom to your advantage to do so. A commercially minded Freeholder is likely to try and maximise his/her return. Tip: The advice of a qualified surveyor is invaluable. 2. How is the premium for the lease extension calculated? Although the Act sets out a methodology that both parties must follow, there’s considerable scope for variation, and it is quite usual for the respective sides to come up with widely varying figures. A surveyor acting for the Freeholder is likely to use valuation tolerances in the interests of his/her client. Where a lease term falls beneath 80 years, the basis of valuation includes a “marriage value” which will increase the level of premium payable, sometimes by a significant amount. Tip: Ensure you have the expertise of an experienced solicitor early on in the process. 3. What happens if the parties can’t agree a figure? The parties can involve an Leasehold Valuation Tribunal. These are relatively low-cost hearings whose primary purpose is to determine the appropriate level of premium that should be paid. Tip: Put forward a realistic price at the outset; unrealistic figures are routinely set aside at tribunal. 4. What costs are involved? The Leaseholder bears the Freeholder’s reasonable legal and valuation costs as well as his/her own. This includes professional fees (e.g. solicitors and surveyors) and other expenses paid because of the transaction. It does not include costs which are paid because of an appearance before the LVT. If the costs are believed to be unreasonable an LVT can be asked to make a determination. Tip: seeking independent advice from solicitors and surveyors is likely to save money. 5. My lease still has more than 60 years to go – why would I want a new lease? Your lease loses value as it gets shorter. Many building societies and banks won’t give mortgages on flats with leases of less than 70 years. You may have difficulty selling your flat or realising its full value without a new lease. Tip: the leaving the lease to drop lower often means more expense in the long term. 6. I rent out my flat but have never occupied it. Can I still get a new lease? Yes, although there used to be a three year residence requirement to qualify for a new lease that has now been abolished and replaced by a two year ownership requirement. 7. I am in the process of buying a flat and want a new lease. Will I have to wait until I’ve owned the flat for 2 years before I can get a new12 March 2008 3
  • lease? No, provided your vendor has owned the flat for at least two years he/she can serve a notice claiming a new lease and then assign the benefit of the notice to you at the same time as you complete the purchase of the flat. 8. My mother was planning to extend the lease of her flat but never got round to it. As executor of her estate can I apply for a new lease? Yes, if she owned the flat for at least two years you can apply for a new lease provided you do so within two years of probate being granted.Where do I go for advice?At Northfields we work very closely with experienced local solicitors andsurveyors who specialise in lease extensions. We’d be happy to recommendsomeone to you. If you would like further property advice in relation toselling or letting we’d be delighted to help.Diane SchaeferHead of Marketing & New Businesst: 020 8799 3377e: diane.schaefer@northfields.co.ukThe Northfields Quick Guide seriesThe Quick Guide to SellingThe Quick Guide to BuyingThe Quick Guide to LettingThe Quick Guide to RentingThe Quick Guide to Tenancy DepositsThe Quick Guide to HIPSThe Quick Guide to Lease ExtensionsFor a copy of other guides in this series, visit www.northfields.co.uk and go to theInformation Centre, or call Diane Schaefer on 020 8799 3377.DisclaimerThe information contained in this sheet is a guideline only and a summary ofthe main points of current legislation. Please be aware this is potentially acomplex area of law where it is essential to have specialist legal advice beforetaking any action.12 March 2008 4