What is a leasehold extension?

A leasehold extension is the process of extending the lease term of a property held on a leasehold basis. It helps maintain the property's value and desirability. Leasehold extension legislation allows leaseholders to extend their lease, ensuring the property remains attractive for sale or mortgage purposes.

How long is a leasehold extension ?

The length of a leasehold extension can vary depending on the jurisdiction and specific circumstances. In some countries, such as the United Kingdom, leasehold extensions are typically granted for an additional 90 years beyond the remaining term of the existing lease. However, it's important to note that leasehold extension regulations can differ, and it's advisable to consult local laws or seek professional advice like leasehold valuations for accurate information regarding leasehold extensions in a specific jurisdiction.

What are the benefits of lease extension ?

Extending the leasehold of a property offers benefits such as increased property value, improved marketability, easier access to mortgage financing, peace of mind and security, the avoidance of escalating costs, and more control over property management.

What happens to leasehold property after 99 years ?

After 99 years, the leasehold property typically reverts back to the freeholder, unless the lease is extended by the leaseholder. The ownership of the property, along with the land it is built on, returns to the freeholder once the lease expires. As a lease approaches its expiration, the property’s value may decrease, making it more challenging to sell or mortgage. It is advisable for leaseholders to consider extending their lease well before it reaches the 99-year mark to maintain the property’s value and their ownership rights.

Why choose leasehold Valuations for Lease extension or Buying Freehold ?

1. Fair Price: A leasehold valuation ensures you pay a fair price for a lease extension or freehold purchase.2. Increased Property Value: Extending the lease or buying the freehold can potentially increase your property’s value.3. Cost Savings: Accurate valuation helps minimise future costs like ground rent.4. Stronger Negotiation: A valuation report strengthens your position during negotiations with landlords.5. Legal Compliance: Valuations ensure you meet legal requirements for lease extensions or freehold purchases.6. Future Planning: Valuations help you plan for selling or passing on the property to future generations.7. Expert Advice: Engaging a valuer provides access to their expertise and guidance.8. Mortgage Support: Valuation reports improve your mortgage opportunities for lease extensions or freehold purchases.

How much does it cost to renew a leasehold ?

The cost of renewing a leasehold in the UK can vary depending on various factors, such as the property value, the length of the renewal term, and any negotiations between the leaseholder and the freeholder. Unlike extending a lease, which typically involves paying a premium to the freeholder, renewing a lease generally involves paying a nominal fee known as a “peppercorn rent” or a small percentage of the property value.The exact cost of renewing a leasehold will depend on the specific terms agreed upon between the parties involved. It is advisable to consult with a solicitor or a licenced conveyancer who specialises in leasehold matters to get an accurate estimate of the costs involved based on your particular situation.

Q. How much does it cost to extend a leasehold in uk ?

The cost of extending a leasehold in the UK can range from a few thousand pounds to tens of thousands of pounds, depending on factors such as the remaining lease length, property value, and negotiated terms with the freeholder. Additional costs include legal fees, valuation fees, and disbursements such as Land Registry fees. It’s recommended to seek professional advice for an accurate estimate based on your specific situation.

What is Collective Enfranchisement | An Advanced Guide

November 23, 2020

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What is Collective Enfranchisement?

Leaseholders will own the freehold of the entire building which is why the term ‘collective’ is used. However, this is a complicated and lengthy process so it is advisable to instruct a Collective Enfranchisement Solicitor to do it for you.

It is also advised to get Collective Enfranchisement Valuation done from a surveyor to get an idea of the best and the worst amount that can be offered in the Initial Notice.

The best way to purchase a freehold by a group of participants is via a company set up for this purpose and all participating leaseholders will be members of this.

Why should you own a freehold?

Owning a freehold of your building individually or among a group of residents would mean you have more control over your own building and you will partly legally own the ground and the structure of the flat which can allow you to waive off the ground rent. Also, any lease extensions of the participating flats would be agreed upon between the participants at no extra cost.

If you want to modify your flat in any way or undertake an extension on your flat, a group of residents who own the freehold can look at this more approvingly than an external freeholder.

Additionally, you and your joint owners will gain the right to employ any property management company to take care of the maintenance and cleaning of communal areas, which would not have been possible in the case of an external freeholder.

Who and what qualifies for a Collective Enfranchisement?

Before the process is carried out, the building and the participating tenants must qualify for the Collective Enfranchisement.

Qualifying criteria for the building:

The building must contain at least two flats
It must be a self-contained building or be a part of a building with independent services to that part
At least two-thirds of the flats must be owned by qualifying tenants (whose leases have more than 21 years remaining)
Not more than 25% of the internal floor area is being used for non-residential purposes, for example, shops or offices. Garages and parking spaces will be classified as residential areas

Qualifying criteria for leaseholder:

The leaseholder must have a lease which is for a period longer than 21 years
The leaseholder must not own more than two flats in the building

The Procedure for Collective Enfranchisement

Once you’ve checked that the building and the tenants are meeting the qualifying criteria the next step would be to form a working group and enter into a formal participation agreement which will set out the terms of the purchase and sharing of the Collective Enfranchisement Costs or premium between participating members.

Due to the complex legal procedure, it is recommended to join together and instruct a Collective Enfranchisement solicitor and surveyor to act for you. The surveyor will be able to perform a better valuation of the property and advise the amount to be offered in the Initial Notice.

The solicitor will usually advise you to set up a company for the purpose and all the participating leaseholders will then be members of this company. This will also be the Nominee purchaser who will be mentioned in the Initial Notice.

Once the surveyor has calculated the Collective Enfranchisement Cost the Initial Notice may be served, stating the name of the freeholders, the Nominee purchaser, and the premium you’re willing to pay. The freeholder then has a two-month window to come back and serve a counter-notice saying if they accept the request or not and put forward their terms and conditions if any.

If the freeholder disputes the premium the parties have a further six months to negotiate. If an agreement cannot be reached within this period then the matter can be taken to the Leasehold Valuation Tribunal after that.

What is Collective Enfranchisement? An advanced guide

Collective Enfranchisement Costs

It is highly recommended to get a valuation of the property done by a Collective Enfranchisement Surveyor before proceeding with the legal formalities so the leaseholders can have an idea of the premium.

Though an exact value of the settlement figure is not really possible to predict, the surveyor should still be able to provide a ‘best and worst’ figure from the leaseholders’ perspective.

Also, note that the leaseholders will be responsible for their own costs as well as the freeholder’s surveyors and legal costs. If the matter gets referred to the Tribunal, each party will be responsible for their own expenses incurred during the Tribunal proceeding