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propertylawyer
propertylawyer, Solicitor
Category: Property Law
Satisfied Customers: 285
Experience:  Property solicitor with expertise in commercial and residential property transactions.
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I own the leasehold of a flat which I have let past 10

Customer Question

Hi
I own the leasehold of a flat which I have let for the past 10 years. We (me and 2 other of the 5 leaseholders) have been having trouble with the managing agents and they haven't issued us with an invoice for insurance or ground rent for the past 3 years and they refuse to give us a straight answer as to why. We were considering looking into possibly trying to purchase the freehold but I've just looked into my own lease and it's down to 68 years left (I thought it was at 88 : ( ...) so I have to act now one way or another.
So with a managing agent and a freeholder that won't reply, what should be my first step to trying to find out my options in terms of extending my lease, or taking steps to find out if all of us leaseholders can buy the freehold...?
Thank you
Shirley
Submitted: 1 year ago.
Category: Property Law
Expert:  propertylawyer replied 1 year ago.

Hi Shirley

Thanks for your email.

As to extending the lease, you are entitled to extend the term as you have owned the lease for in excess of 2 years.

You can do this on a friendly basis, this means agree terms with the landlord but bear in mind that the landlord will want to retain a ground rent. The other option is the statutory route, you get an additional 90 years at a peppercorn ground rent. Peppercorn effectively means zero pounds. The statutory route involves service of a notice on the landlord in the prescribed form, there are strict time limits so it is recommended that you use a solicitor.

The issue here in financial terms is the premium which needs to be paid to the landlord. You can instruct a surveyor or in the first instance check www.lease-advice.org and use the calculator. The landlord will likely dispute the premium and you will then need a surveyor to negotiate this for you. Do note this will be potentially expensive as you have dropped below 80 years and the marriage value is then factored in which increases the premium considerably.

As I said strict time limits apply and you will need representation to protect your application as you may need to apply to the tribunal within specified time limits to prevent your application being declared void and being time barred for 12 months from applying again.

I hope this helps on the lease extension issue.

I will send a separate answer on enfranchisement, right to buy the freehold.

I will come back to you soon. In the meantime do come back to me if you have any questions on my answer above relating to the lease extension.

Kind regards

Paul

Expert:  propertylawyer replied 1 year ago.

Hi Shirley

Apologies fir my delay in coming back to you on the enfranchisement issue. There is criteria to satisfy. I set this out below:

- The building must contain at least 2 flats. From what you gave said the building contains more than two.

- 2/3 of the flats must be owned by qualifying tenants. Basically, the lease must have been granted for a term in excess of 21 years.

- the landlord cannot be a charitable housing trust

- No more than 25% of the building, excluding common parts, can be used for non residential purposes.

- Enfranchisement is prohibited if the building Is a conversion into 4 or fewer flats and is not purpose built and same person has owned the freehold since before the conversion and the freeholder or a family member has been resident for the past 12 months.

Once you establish whether or not you can enfranchisement you can proceed. You will need to consider if the leaseholders will own the freehold individually or in the name of a company. I would recommend a company of which the leaseholders will be shareholders.

Before serving notice, instruct a surveyor to provide a valuation and advise on the offer to put forward in the notice. This may not be accepted by the landlord and then the surveyor will need to negotiate on you behalf.

Once you have the valuation and know the offer to put forward you can instruct a solicitor to prepare and serve the notice on the landlord.

Once served the notice will trigger the statutory procedure for purchasing the freehold. It is best to use a solicitor to ensure that the notice is not incomplete and that there are no errors in the notice. An incomplete or incorrect notice can be rejected as invalid.

The statutory procedure has time limits within which various steps must be completed, for example the landlord must respond to the notice within 28 days, other requests for information or service of notice or documents, submission of the draft contract and any application to the tribunal.

I hope the above is helpful.

Please do let me know if you have any questions or queries in relation to my replies. I am happy to assist further. I can chat this through with you on the phone if you wish.

Please can I ask you to accept my answer /leave positive rating.

Kind regards

Paul

propertylawyer and other Property Law Specialists are ready to help you
Customer: replied 1 year ago.
Many thanks for your reply. Instructing a surveyor seems to be the next step either way so I'll speak to the other leaseholders and get a survey done. Thanks again.
Expert:  propertylawyer replied 1 year ago.

Hi Shirley

that's the first step for both enfranchisement and lease extension. A surveyor will give you best and worst case valuations. If you are able to get enough tenants to enfranchise then delay the lease extension. You will get better terms for the lease extension, 999 years at a peppercorn ground rent fir a nominal premium.

Don't hesitate to send me a pm if you need help on this in the future. I regularly act for clients who either buy the freehold or extend their lease.

Good luck