Firstly you need to know:
You can apply to extend your lease only if you are what is known as a “Qualifying Tenant” under the 1993 Act. You are a Qualifying Tenant if:
2.) You are not a business tenant.
3.) The original term of your lease was longer than 21 years (or contains an explicit right for perpetual renewal); and
4.) You have been the owner of the lease for at least two years.
You have the right to claim a lease extension from your landlord if:
1.) Your immediate landlord is the freeholder of the property (if your immediate landlord is a leaseholder, the question of an extension will depend on the length of the term your landlord has left on his lease); and
2.) Your landlord is not a charitable housing trust.
(NOTE: There are other leases which may qualify for renewal. If you are unclear please seek professional legal advice.)
After meeting the qualification guidlines the next big question is:
What will it cost?
You will need to pay a premium for the lease extension. The price is the cumulative total of the following:
1.) The diminution of the value of the landlord’s interest in the flat.
2.) 50% of the marriage value of the existing lease term and the additional 90 year lease; and
3.) The compensation for loss in clause of other property owned by the landlord.
The date on which the tenant applies for a lease extension will be the date of valuation.
In addition to paying you own legal fees you will also be required to pay the landlord’s legal fees and the costs of the valuation.
Some other very popular questions that have been asked on lease hold are:
What happens if I want to buy a leasehold flat and I want to extend the lease?
As you need to have owned the lease for at least two years you will not be able to extend the lease after you have acquired it. Therefore, it is common practice for the seller of the leasehold to make an application to extend the lease and then assign the benefit of the application to you as purchaser.
What lease will I be granted?
You have the right to be granted a lease of 90 years (plus the present unexpired term) from the expiry date of your current lease. The rent will be a peppercorn (i.e. rent free). The lease will be broadly on the same terms as your existing lease but may be subject to amendment (depending on any modifications, exclusions and/or additions to the demised premises).
It is worth noting that the landlord will retain a redevelopment right at the end of the existing term of the lease. The landlord will have to pay the full value of the remaining 90 year lease to you and the termination is subject to a court application by the landlord.
What is the procedure?
As a Qualifying Tenant your solicitors will serve a preliminary notice to obtain information from your landlord. Your solicitors will then serve the notice of claim which will state:
1.) Details of the property.
2.) Details of the lease (showing that you are a Qualifying Tenant);
3.) Details of the premium offered; and
4.) A date for the landlord’s counter-notice.
The landlord should then respond and will probably require payment of a deposit equal to 10% of the premium offered.
The landlord will value the premises and serve a counter-notice which will state whether they object to the claim.
If the parties cannot come to an agreement they can apply for the Leasehold Valuation Tribunal to determine the claim.
This article is free to republish provided the authors resource box below remains intact.
Repossession
Related articles:
- Serviced Office Space vs Conventional: Which London Office Space Is Best For You? Upsizing or downsizing, establishing a second or even third office, relocating to a more prestige location or simply finding somewhere that is more affordable in uncertain times - these...
- More Of The Quick Guide To Conveyancing Here is now the rest of that quick and very interesting guide to conveyancing.Once you have asked all the necessary questions to your conveyancing solicitor, you also need to...
- Save Money by Lowering Overheads and Renting Commercial Property London With the credit crunch in full swing it’s now the time to be cutting back on hefty overheads. Dump those long term leasehold contracts and get a short term...
- Landlords Property Contents Insurance It is a known fact that, you can insure the content or items in your house, which is owned by you although you have let it out on rent....
- Quick Guide To Conveyancing Despite the recession and decrease in property prices, people will always move house, even in 2009! To make this process as simple as possible, it is good to understand...
