An owner of a leasehold interest in a house or flat may have a right to extend the term of the lease or to acquire the freehold.
The Leasehold Reform Act 1967 gave leaseholders the right to buy (enfranchise) the freehold of the property or in some cases extend the lease, subject to satisfying the qualification rules.
In order to establish the price to be paid, two bases of valuation are provided and there are statutory rules to determine which is to apply.
The 1993 Leasehold Reform Housing & Urban Development Act (As Amended) provides a right for the grant of a new lease for a term 90 years plus the present unexpired term – all at a peppercorn rent.
Our top tip for flat owners is to add value and save money by securing the statutory 90 year lease extension before the existing term reduces to less than 80 years. This avoids having to pay the marriage value element within the statutory formula used in calculating the premium to be paid for the lease extension.
Additionally, there are provisions which enable leasehold flat owners in a building containing a minimum of 2 flats and where no more than 25% of the internal floor area is in non-residential use to collectively enfranchise ie. to enforce the sale to them of the freehold.
In both cases there are qualification rules which have to be satisfied and a statutory basis of valuation applies.
At Drew Pearce our team of RICS Registered Valuers have experience in providing valuation advice in connection with the statutory procedures regarding the above and also in cases which are outside the statutory provisions (e.g. National Trust Property) where the landlord and lease holder agree to extend the lease.
Our Enfranchisement and Residential Lease Extension valuations services are available from Exeter, across Devon and the wider Southwest.
For further information, please contact our RICS Registered Valuers - Martin Woodhead FRICS or Lloyd Smale FRICS on 01392 201748.