Legal advice: lease issues
John Healy of Healys LLP gives advice and information on legal matters
Brighton is often referred to as “London by the Sea”. It’s not hard to see why when you look at the cultural diversity and all the attractions the city has to offer. And, like London, many buildings in the city are made up of residential leasehold flats and apartments.
In relation to residential leasehold properties, my colleagues and I are often required to advise on such things as onerous lease covenants, service charge disputes and extending the term of a client’s lease.
The law relating to leaseholders’ rights to an extension of their lease can be daunting.
To qualify for a lease extension, the leaseholder must first satisfy the condition that they have owned the flat for at least two years. Once satisfied (unless terms can be agreed informally), it will then be necessary to serve Notice on the landlord requesting an extension to the lease. After service of this Notice the landlord has a statutory time period in which to dispute the amount payable for the extension.
Hopefully the cost of the extension can be agreed amicably with the landlord, and the solicitors for both parties can then prepare the necessary deed. The leaseholder will be required to meet the landlord’s legal and valuation costs. If no agreement can be reached as to the sums payable, it may be necessary to take the landlord to a specialist property tribunal.
The need to extend your lease is not a problem that will go away, and the shorter the unexpired term of the lease, the greater the cost of the lease extension. Any term of less than 85 years remaining needs some consideration. If your lease has less than 80 years remaining this automatically entitles the landlord to an increased premium for extending your lease.
Many clients that come to us at Healys only consider extending their lease as part of the conveyancing process when selling their property. This could cause problems if the amount to be paid for the extension cannot be agreed with the landlord at that time, or if the landlord is untraceable or unwilling to reply to communication. If there are problems extending your lease at this stage, the chain may be unwilling to wait for the matter to be resolved and you may lose your buyer.
Even where a leaseholder is not intending to sell their property, if the unexpired term of their lease is less than 75 years it could well affect the ability to re-mortgage the property.
In cases where the leaseholder also has a share in the freehold (usually by way of membership of a freehold limited company) it is advisable to check with the company that there will be no premium for extending the lease. In this situation the leaseholder will still be expected to pay the company’s legal costs.
If you have concerns regarding the length of your lease do take legal advice and, where able, it is wise to deal with the extension of your lease as soon as possible.
Please contact one of our team on 0800 280 0432 or email brighton@healys.com if you have any questions regarding extending your lease.
