Roger Nelson FRICS, IRRV Managing Director of Each Side Leasehold and full member of the Association of Leasehold Enfranchisement Practitioners (ALEP) takes a closer look at lease extensions

• “I cannot sell my flat as the lease is too short”
• “We have asked the landlord to extend the lease but he says No!”
• “We have asked the landlord for a new lease but he wants £50,000 plus his costs plus a modern and rising ground rent”

Leases are for a set term of years and like sand in an hour glass will eventually and inevitably run out. Fortunately the law comes to the rescue of lessees: it gives you rights of a 90 year lease extension at a peppercorn or nil ground rent and lays down the framework as to how payment for this is calculated.

A lease extension gives a lessee many of the benefits of a collective purchase of the freehold (enfranchisement) but has the advantage of being quicker since there is no need to get agreement and commitment from others, you are in control ! It will increase the value of your flat and make it more attractive to potential purchasers, this is vitally important in the current market as it could also make the difference between selling or not selling!

Here are two tips for the unwary

1 If you can, start formal action before the lease has less than 80 years to run. To be 100% certain get your solicitor to serve formal notice on the landlord within that deadline. Where leases have 80 years or less to run the payment can be considerably more as the landlord gets a 50% share of the increase in the value of the flat as a result of the lease extension “marriage value”.

It follows that the shorter the lease the more the gain in value following the lease extension the greater will be the 50% figure.

2 When you want to sell it is a good idea to get your solicitor to serve this notice which can then be assigned to your purchaser with the leasehold title. This is because they will only get the same legal rights as you 2 years after the title has been registered under their name. Of course it could be catastrophic if during this time the lease falls below 80 years.

I have been dealing with this area of work in London and the South East for the last 10 -12 years. I hope this is of help but if you need further advice call me or Jackie free on 0800 902 0466 or e mail info@eslease.com

This is based upon our understanding of the law as at January 2009 as it affects valuations. If you need any clarification you should consult with a solicitor who practices in this area of work.

Roger Nelson