With over 4 million leasehold properties in England, of which it is estimated that approximately half are on leases of less than 80 years, many homeowners find themselves needing to extend a lease. Extending a lease can prove complex and costly if care is not taken, yet extending a lease is a fundamental element in owning a leasehold property. Of course, with the advice and services of a lease extension solicitor, the process of extending a lease can be much less stress-full and the cost of extending the lease can be reduced through negotiation, subject to the approach taken.
Lease extensions are critical in ensuring your property retains market value; the lower the lease, the lower the asking price. Adding length to a lease can add significant value to the property and increase its appeal.
At present, before a leaseholder can extend their lease they must have owned the property (not necessarily lived in the property) for a minimum of two years. However, The Law Commission – a statutory independent body that advises on reform, have put together a proposal that means this would no longer have to be the case. This follows calls from those owning a leasehold property to make the process fairer.
The proposals seek to give leaseholders additional rights to buy or extend their lease and to make the process easier, cheaper and quicker. The proposals, which are open for consultation until 20th November and extend to flats and apartments do however fall short of providing a specific formula for the price that leaseholders have to pay to buy out or extend their lease.
Concerns have been raised by those owning a leasehold property that they have had very little control over the amount of ground rent payable and that they are subject to the mercy of the freeholder as to the amount they pay for the lease, in some instances paying a substantial percentage increase every time.
The briefing paper put together by the Law Commission states that options to reduce premiums payable by leaseholders of houses include a simple formula (ground rent multiplier or percentage of capital value). The initial proposals included suggestions that the ground rent multiplier could be set at 10 times the existing ground rent, which were largely welcomed by those who owned a flat or house. However, the latest proposals stress the importance of ensuring that freeholders are properly compensated.
As a result, the National Leasehold Campaign Group have labelled the latest proposals a purely window dressing tactic and have questioned the positive impact that the changes will have on those looking to extend or buy their lease. Questions have been raised about the extent to which the changes will impact each individual after the proposals have clearly stressed the importance of compensating the freeholder and the extent to which the new proposals will signify any real change or put leaseholders in more control. The group have also questioned whether compensation will be available to those who have been mis-sold their leasehold properties.
Holmes & Hills Solicitors regularly assist homeowners with lease extensions and are able to assist with your queries. For advice and a quote to help you with extending your lease, please contact one of our five offices on 01376 320456 (Essex) or 01787 275275 (Suffolk).
Holmes & Hills Solicitors act for clients across the country from five offices in East Anglia. If you instruct Holmes & Hills, there would be no need to attend one of our offices; our services can be provided to you at a distance with advice and communications via telephone and email.
Posted 15/11/2018 by:
Partner and Head of Residential Property Team
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