Sussex Lease Extensions Blog

Absentee Freeholders

Posted on 31/05/17, filed under Fresh News

Leaseholders who wish to extend their residential leases or purchase the freehold of their block when the freeholder cannot be traced do not need to despair. The 1993 Leasehold Reform Housing & Urban Development Act addresses this situation and provides a procedure for the lease extension/freehold enfranchisement to still happen when the freeholder’s whereabouts is unknown. We at Julian Wilkins & Co Chartered Surveyors have successfully dealt with a number of such cases and are able to assist leaseholders in this situation.

Please call us for an initial free telephone consultation to discuss the particular circumstances of any case.

Selling whilst in the process of obtaining a statutory lease extension

Posted on 12/12/13, filed under Fresh News, Statutory Lease Extensions

Did you know if you are selling a flat with a short lease you can do so whilst the statutory lease extension is still uncompleted?

The 1993 Leasehold Reform Housing & Urban Development Act requires leaseholders to have owned the property for two years before being able to claim a statutory lease extension. However, there is provision within the Act for the benefit of an extension notice to be assigned to a purchaser, meaning that they, in effect, avoid the 2 year ownership requirement.

In practice, this can work in one of two ways:

Firstly, property sold with the short lease but with the benefit of a valid S42 Notice (the notice which is served on a freeholder to claim a Statutory Lease Extension) assigned to the buyer. In this case the buyer would only pay a short lease value for the flat, but has the certainty of being able to complete a full statutory lease extension within a few months.

The extension will be on statutory terms with 90 years added onto the existing unexpired lease term and the ground rent being a peppercorn (zero) for the duration of the lease. In this instance, the vendor will have to accept that the price they are to receive reflects probably the worst case scenario of the lease extension costs but may allow an otherwise difficult to sell flat be sold.

Secondly, the vendor can start the process as above but in this case to still be responsible for the cost. The buyer in this case pays the vendor as if the lease extension is complete and then a sum of money to cover the cost of the lease extension and fees is held by the seller’s solicitor pending completion of the lease extension sometimes several months after the sale completed. Once matters are agreed, the seller’s solicitor pays for the lease extension and fees out of the money retained and the balance is returned to the vendor. This means the vendor achieves a correct sale price for the property and the buyer has the certainty of purchasing a flat with a long lease at an agreed price.

These methods of buying and selling short lease flats are becoming increasingly popular. But there are some pitfalls if not treated properly. If you are considering buying or selling a flat with a short lease, you should always seek expert valuation and legal advice, on how to proceed. If you would like more information speak to the experts at Sussex Lease Extensions now by calling us on 01903 872211.

Section 42 Notices: The Tenants Notice

Posted on 07/10/13, filed under Lease Extension Advice, Leasehold Valuation Tribunal, Statutory Lease Extensions

A Section 42 Notice is the formal notice a leaseholder issues to their freeholder when claiming their legal right to a statutory lease extension.

Also referred to as the Tenants Notice, a Section 42 Notice allows leaseholders to begin formal proceedings to extend their lease. The lease extension adds an additional 90 years to the current unexpired term and reduces the ground rent to a peppercorn (zero) for the duration of the new lease.

Why do you need to serve a Section 42 Notice?

Informal negotiations with freeholders often do not result in reasonable terms being agreed. Freeholders can propose short extensions, high escalating ground rents and high premiums.

By serving a section 42 Notice, the freeholder cannot argue about the terms of the lease extension other than the amount of the premium. If this cannot be agreed, the premium and the rechargeable fees can be referred to the First Tier Property Tribunal (Residential) for resolution.

Preparing to serve a Section 42 Notice

In order to serve a Section 42 Notice you must appoint a lease extension surveyor to value the cost of an extension. An incorrect offer value can make a Notice invalid. Once you have a valuation, a solicitor is instructed to serve the S42 Notice on the freeholder.

What next?

The freeholder has two months in which to either accept or reject the Section 42 Notice. Generally the freeholder cannot reject a Notice unless it is incorrectly served or contains incorrect or insufficient information.

If a freeholder rejects the premiums offered in the S42 Notice, as they often do, then the premium is negotiated by the Surveyors acting for the freeholder and leaseholder.

If an agreement cannot be reached then either party can, after an initial two month period, refer the matter to the First Tier Property Tribunal (residential).

Extending your lease can be a timely and costly process. Speak to the team at Sussex Lease Extensions today on 01903 872 211 to ensure it runs as smoothly as possible.