A leasehold property is a diminishing asset and as its term reduces so does the value of the flat. The Leasehold Reform, Housing and Urban Development Act 1993 (as amended) gives qualifying leaseholders the right to extend their lease by 90 years at a peppercorn rent.
To qualify you need to have owned the property continuously for the past two years, the lease must have been granted for a term of more than 21 years, and the flat must be a qualifying flat. It is not compulsory to have occupied the property during the previous two years and it is possible for the initial notice to be assigned with the lease when the flat is sold.
Recent Court cases have decided that offers made in Notices that can not be justified in Valuation terms render the Notice invalid. This can result in a waste of time and money; hence it is important to seek advice from a knowledgeable and experienced Company like ours before you proceed. We have considerable experience in Lease Extension work and we are conversant with all relevant Leasehold Valuation Tribunal decisions and Court of Appeal decisions in this regard.
We use these decisions together with our knowledge of the market place, comparable sales evidence, and information from our vast database to justify using the most advantageous Capitalisation Rate, Deferment Rate, and Relativity Rate that will be in your best interest.
As per Schedule 13 of the 1993 Act, the calculation of the premium will take account of:
|The loss of the ground rent,|
|The deferment of the reversion by 90 years,|
|50% of any Marriage Value (only for leases that have less than 80 years unexpired),|
|Compensation for damage to other property retained or for any other loss or damage resulting from the grant of the new lease.|
The cost of extending the lease increases significantly once the lease term falls below 80 years, and each year the cost of extending the lease continues to increase further. It is therefore advantageous to consider extending the lease before the term gets less than 80 years.
Our Lease Extension report will include the premium that should be offered to the freeholder for the extension of the lease by an additional 90 years. Our report will also include an appendix with a detailed calculation of how we arrived at the premium to be paid. We would also provide within the report, a 'best and worse case' scenario valuation (i.e. valuations and detailed calculations from the point of view of the leaseholder and from the point of view of the freeholder). This would give you the minimum and maximum figures to enter into negotiations with. In most cases, our report should enable you to negotiate and reach an amicable agreement with the freeholder or leaseholder. In the unlikely event that you are unable to reach an amicable agreement with the other party, we would be able to negotiate with the freeholder/leaseholder/their representatives on your behalf and if necessary take the matter further to the Leasehold Valuation Tribunal for a decision.