It may not be possible for leaseholders to seek enfranchisement or the right to manage:
In those circumstances, a leaseholder may instead consider an individual lease extension.
Unlike an enfranchisement or right to manage claim, a lease extension claim is an individual right available to a flat owner whose lease was initially granted for at least 21 years.
The right is to extend the lease by 90 years, and at the same time to reduce the ground rent (but not service charges) payable under the lease to nothing, in return for payment of a price to the Freeholder. It confers no management rights on the individual flat owner.
If the lease has around 80 years to run, leaseholders are strongly advised to extend the lease without delay. If a lease has less than 80 years to run at the time when a lease extension is claimed, the price is increased by an additional valuation element called the “marriage value”. Marriage value will also increase the price payable by a group of leaseholders to enfranchise the freehold. In some cases, particularly where the length of the lease is significantly less than 80 years, the price payable is increased very substantially.
The price payable for the lease extension depends on a number of factors, including the market value of the flat and the length of the lease.
The price payable for the lease extension will be higher if the lease has less than 80 years to run, substantially higher if the lease has significantly less than 80 years to run.
Leaseholders should approach a valuer with expertise in the field to provide advice on a price before the Claim Notice is served. This is because, by law, the price in the notice must be “realistic”, so valuation advice is needed at the outset.
A valuer is also likely to be required by both freeholder and leaseholders for negotiations, and to give expert evidence to the Tribunal if agreement cannot be reached. At TWM, we have regular contact with specialist valuers, and will be pleased to place clients in touch with them.
A 90-year extension of the length of the lease and reduction of the ground rent (not service charge) to nil.
If the landlord is missing, there is a separate procedure, involving a combination of the Court and the Tribunal, which enables the leaseholder to claim a lease extension even in those circumstances. Further details can be supplied on request.
In addition to the price, there are certain fees that have to be reimbursed to the landlord. These include costs incurred in checking whether the leaseholder has the right to a lease extension, costs relating to in preparing and completing the next lease, and the costs paid by the landlord to a valuer for advice on the value of the lease extension.
The landlord cannot recover any costs from leaseholders in connection with the Tribunal application.
At TWM, we can handle the application, whether your are a landlord or leaseholder, details of charging rates and anticipated costs will be provided on request.
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