Leasehold Property Professionals
029 2066 7750 Park House, PO Box 2521, Cardiff CF23 0GP
Flats - Lease Extensions
The Term
For the tenant, a leasehold flat will be a wasting asset. The lease will allow the tenant to remain in the flat, usually paying ground rent to the landlord for an agreed number of years. Sometimes the agreed number of years - "the term" is so long that the tenant should have no real concerns - 250 years or even 999 years. Where the term is shorter, however, the tenant may well be advised that it is a good idea to seek an extension of the lease.
Reversion
For the landlord, a leasehold flat may well be an attractive investment promising good returns. As property prices rise, which over the medium to long term has been the clear case in the UK, the landlords' investment will rise as well. Further, as the lease gets short the prospect of the lease ending and the property being returned to the landlord - "the reversion" gets closer then values will also start to rise, the prospect of having a potentially valuable flat returned to the landlord in 10 years is clearly more valuable than having to wait 250 years! The landlord therefore benefits twice - once as property prices go up and once as the lease gets shorter and the reversion nearer.
Marriage Value
There are some key dates both tenant and landlord should be aware of. When there is less than 80 years left on the lease then statute allows for the inclusion of a concept known as "marriage value" should the lease be extended, usually meaning that the tenant will pay more and the landlord will receive more. When there is less than 60 years left on the lease then the property may be VERY difficult to mortgage.
Lease Extension
The tenant and landlord may agree a voluntary extension of the lease. For the tenant this may provide better security. Whilst the landlord will usually benefit from either a payment - a "premium", and / or an increased ground rent. In this case both the landlord and the tenant should seek independent valuation advice and Bureau Property Consultants provide just this service.
Leasehold Reform, Housing and Urban Development Act 1993
Where a voluntary lease extension cannot be achieved then in certain circumstances a piece of legislation known as the Leasehold Reform, Housing and Urban Development Act 1993 may allow the tenant to serve a Notice on the landlord requiring the lease to be extended for 90 years with no ground rent being payable for the entire new term. For example, a current lease with 75 years remaining, and an annual ground rent of £50 pa, would become a new lease of 165 years with no ground rent throughout that term. In this case both the landlord and the tenant should seek independent valuation advice and Bureau Property Consultants provide just this service.
Bureau Property Consultants represent both tenant and landlord for lease extensions - either voluntary or under the 1993 Act throughout England and Wales. Bureau Property Consultants have worked with both local and national law firms with regard to this potentially difficult procedure and can advise on every aspect of the process from an initial explanation of the likely issues involved, through valuation and instruction of solicitor, to negotiation with the other parties surveyor right through, if necessary, to making an application to, and appearing before, a Leasehold Valuation Tribunal.