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Leasehold Enfranchisement

Whether you wish to extend your flat lease, buy the freehold to your block of Flats or buy the freehold of your leasehold house or we have the expertise to help.

This work in the South East has grown greatly in importance in recent years. Being able to extend the lease term has become ever important in the main conurbations from Southampton to Portsmouth, Fareham, Gosport and on to Chichester and Brighton.

We have helped a great many leaseholders in our region with their flats and houses and also in London and its suburbs.

It is a very complex and fast changing area of law. It involves an intricate knowledge of Enfranchisement and Right to Manage Law, Leasehold Property law, Tribunal and Court procedures and not least a thorough knowledge of the valuation principles followed by specialist Surveyors with whom we enjoy a close association

It is essential to appoint those accredited to carry out this work. Our leading experts – Nicola Crookes-West,  Samantha Marsh and Jon Tawse are members of The Association of Leasehold Enfranchisement Practitioners (ALEP) and we are recommended practitioners by the experts at LEASE.

Not only do you need to have clear advice about the options that may be available but it is vital to know the costs of achieving your wishes. We are happy to have an initial discussion with you at no charge and we know how much that sets minds at rest.

Glossary of leasehold terms used in transactions

Appurtenant property  

This is property separate to the flat but that is used and enjoyed with the flat, such as a garage or garden. The appurtenant property must be capable of being used solely and exclusively by the leaseholder and so would include a private garden but not a shared garden.

Completion                    

This is the date on which the balance of monies are paid by the leaseholder to the freeholder and the new lease is entered into.

Counter notice               

This is the freeholder's formal response to the notice (a “s42 Notice”) served by a leaseholder in statutory lease extension cases. The freeholder has 2 months from receipt of the s42 Notice  to serve his counter notice.  The Counter Notice will contain the freeholder's valuation of the premium, which is the counter offer. Once the counter notice has been received, the parties can start negotiations.

Exemptions                    

Not all freehold property is subject to the statutory lease extension provisions.  The following types of property are not covered by the lease extension legislation:

  1. commercial property. The Leasehold Reform Housing and Urban Development Act 1993 (as amended) only applies to residential flats.
  2. The landlord is a charitable housing trust.
  3. buildings within a cathedral precinct.
  4. Properties owned by the National Trust.
  5. Crown property

First Tier Tribunal       

The (FTT”) was previously known as the Leasehold Valuation Tribunal  (“LVT”). This is a special type of Court that has the power to make decisions on the level of premium, the terms of the new lease or lease enfranchisement and costs payable if the freeholder and the leaseholder are unable to agree these through negotiations between themselves.

Freehold                      

A freehold title has no time limit on the period of ownership. The ownership of the majority of freehold titles are recorded at the Land Registry. The only exception is unregistered titles.

Freeholder                  

This is the owner of the freehold. This person/company can sometimes be called the Landlord or the Reversioner, all of which mean the same thing.

Ground Rent              

This is the annual sum paid to the freeholder by the leaseholder, and is provided for within the Lease. The lease will confirm how much is payable and the date(s) on which it is payable.

Head Landlord            

This is the owner of the Headlease. They may also be called the ‘Superior Landlord’.

Head Lease                 

This is sometimes called a ‘Superior Lease’. This is a lease granted (usually for the entire building) by the freeholder to a third party, who often does not occupy the building but only has a legal interest in it.  Underleases (which are often the leases of individual flats) are granted from the Headlease. The length of the headlease is often slightly longer than the length of the individual flat leases.

Lease                          

The Lease is the document made between the Freeholder and the Leaseholder (there will sometimes be third party management companies) which creates the leasehold interest in the property (i.e. the leaseholders right to possess the property for a defined period). The lease also contains provisions which govern the relationship between the freeholder and leaseholder; setting out each parties rights and obligations both towards the property and each other.

Lease Extension          

This is the length of time that is added on to the original term of a lease.

Leasehold                    

This level of property ownership is below that of the freehold. Quite often there are restrictions to buying and selling leasehold property. Leasehold ownership is limited to a specific length of time which is set out in a lease. The ownership of the leasehold title is registered at the Land Registry.

Leasehold Reform Housing and Urban Development Act 1993 (as amended)

This is the legislation that gives leaseholders a right to extend their lease, or buy collectively buy the freehold of their Block. This is often referred to as “the 1993 Act” or the LRHUDA 1993.

Lease Enfranchisement           

This term refers to the process under which leaseholders can collectively force the freeholder to sell his freehold title to them.

Leaseholder                               

This is the owner of the leasehold title. They are often called the ‘Tenant’ or ‘Lessee’ as these terms are used interchangeably.

Leasehold Valuation Tribunal  

See First Tier Tribunal.

Long lease                                 

This is a lease of a flat that: was originally granted in excess of 21 years. Most flat leases are granted for 99 or 125 years. If your flat is shared ownership you do not qualify as a long-leaseholder until you own 100%.

Marriage value                           

This is the increase in the property value following a lease extension.The part of this increase in value must be shared with the freeholder (it is split 50/50 between the freeholder and leaseholder). Marriage value does not tend to apply to properties with leases of longer than 80 years left to run. As such, it makes financial sense to extend a lease before it drops below 80 years to save making this payment, which is usually the most significant part of the lease extension premium.

Non-statutory lease extension  

This is also known as a ‘private’ or ‘informal’  lease extension. They are granted by the freeholder to the leaseholder without the leaseholder having to serve a Claim Notice and so are essentially a private agreement.  As Such the Courts and First Tier Tribunal do not have jurisdiction over these types of lease extension. They are more flexible in terms of what can be agreed between the parties but there is little protection for the leaseholder in the process.

Peppercorn rent                

This is used when referring to the value of ground rent and commonly means ‘zero’.  It may also refer to a token or nominal payment, such as £1.

Qualification criteria    

In order to qualify for a statutory lease extension you must:

  1. have owned the lease to your flat for a continuous period of 2 years.  This requirement applies to all owners individually.
  2. have a lease which was a 'long lease' when it was granted.
  3. not come within the small category of exemptions listed above.

Premium                     

This is the fee payable to a freeholder for granting the extension to the new lease/lease extension. There is a statutory formula for calculating the premium and such calculations should only be undertaken by a suitably qualified surveyor.

Shared ownership     

This is a scheme whereby the buyer buys a small percentage of the property (such as 25%) and pays rent on the remaining part.  The buyer is permitted to buy another share (or tranche) in time until they own 100%. It is only once the buyer owns the full 100% that they can force a lease extension.

Stamp duty                

A transaction tax on property transactions levied by the government. In lease extension cases it would only apply where the amount of the premium is above the stamp duty threshold applicable from time to time.

Statutory lease extension        

This is a lease extension granted under the provisions of the Leasehold Reform Housing & Urban Development Act 1993. The Act gives residential leaseholders who have owned the lease on their flat for two continuous years the right to force their freeholder to grant a 90 year lease extension at a peppercorn ground rent.

Statutory deposit       

On receiving a statutory notice, a freeholder is entitled to have his reasonable legal and valuation costs in connection with granting the lease extension paid by the leaseholder. To give him some costs protection the freeholder is entitled to demand a deposit in statutory lease extension cases. The amount is the higher of 10% of the premium stated in the notice or £250.  You are required to pay this money to your solicitor before the Claim Notice is served.  Credit is given for the statutory deposit when it is time to complete your new lease.

Statutory notice          

This is sometimes called a ‘Claim Notice’ or ‘s42 Notice’.  They all mean the same and are used interchangeably.  It refers to the notice served by a leaseholder on a freeholder in statutory lease extension cases, which requests a statutory lease extension and proposes the premium that the leaseholder wishes to pay. The notice should be registered at the land registry to protect the leaseholders rights.  There are very strict rules about the statutory notice, so it is important to seek advice from an experienced solicitor.

Title                             

This is the ownership of a property (i.e. freehold or leasehold).  The title number refers to the unique number given to each property by the Land Registry.