Landlord and Tenant
Do you own leasehold property?
If you own a leasehold flat or house, did you know that there is legislation giving you the right to increase the value of your property, including:
- Extending your lease (Flat or House). You are entitled to apply to your Landlord for a lease extension. Once the remaining leasehold term falls below 80yrs the costs involved in obtaining a lease extension escalate due to the formula used to value the property. When the remaining term of the Lease falls below 75yrs it will be much hard to obtain mortgage funding either for a buyer if you wish to sell, or yourself if you wish to remortgage.
- Enfranchisement - Leaseholders joining together to buy the freehold of a block of flats (known as Collective Enfranchisement). You are entitled, along with a majority of the Leaseholders in the block to apply to your Landlord for enfranchisement of the freehold. There are various procedures which will need to be followed and a valuation will need to be carried out. As a general rule, the greater the length of time left the run on the Lease the lower the valuation for the purchase will be. The freehold would normally be transferred to a specially formed Company and the Shareholders and Directors are the Leaseholders for the time being of the flats. Once this process has been completed, when you sell or buy a flat in the block, you also sell or buy your share in the freehold Company. This way the Leaseholders control the management of the block and are able to grant themselves either complete new leases or a lease extension extending the term of the Lease to 999yrs with a peppercorn (zero) rent
- Buying the freehold of a leasehold house (known as Freehold Enfranchisement). If you own a freehold house (common in parts of Wales and the Midlands) you are entitled to apply to your Landlord for enfranchisement of the Lease. Again there are various procedures to be followed and a valuation formula to be applied but in general the greater the length of time remaining on the Lease the lower the premium is likely to be. Once you have purchase the freehold the leasehold interest would usually be merged with the freehold interest and is no longer applicable.
- Taking over management of a block of flats (A Right to Manage)
Alternatively, if the Leaseholders are unhappy with the way the Landlord is managing the block but are unable to raise sufficient funds to purchase the freehold, then it is possible to apply for a Right to Manage. A Right to Manage Company would need to be set up and a process followed. The Landlord would still own the freehold and take the annual ground rent but the Leaseholders would arrange and deal with all management issues via their ownership of the Right to Manage Company.
Leasehold Enfranchisement, Lease Extension and Right to Manage cases involve complicated procedures and regulations. If you would like to discuss any of the above in more detail then please contact us for a free “no obligation” consultation to see how we can help you.