Sussex Lease Extensions Blog

Re-Negotiating a Lease Extension

Posted on 19/07/13, filed under Leasehold Valuation Tribunal, Statutory Lease Extensions

The UK property market remains cautious after the recession. The majority of lenders now require much longer unexpired lease terms than ever before for a property to be considered suitable mortgage security, with many not lending upon terms less than 70 years unexpired. Solicitors and Surveyors acting for purchasers will advise clients not to purchase property with less than 85 years unexpired lease terms, without either having a lease extension in place or agreeing a suitably reduced purchase price to reflect the shorter unexpired lease term. Costs of obtaining a statutory lease extension on a property increase considerably as the lease term reduces further.

Lease Extension Valuation

Specialist lease extension surveyors can guide you through the tricky process of applying to your landlord for a lease extension. The valuation process will look at the property’s eligibility and the costs the landlord is entitled to. These costs will include:

  • Any decrease in value of freeholders interest, including the loss of ground rent which reverts to a peppercorn (nil) once the lease extension has been granted
  • The loss of reversionary value to the freeholder due to the lease being extended
  • The marriage value – created from the merging of the existing leasehold interest with the new extended leasehold interest (only applicable where the lease has less than 80 years unexpired remaining)

Lease Extension Negotiation

Once formal notice has been served on the freeholder to claim a statutory lease extension and the freeholder can serve a counter notice. There is a maximum period of 6 months for the negotiation of terms between the parties including the premium. At any time after the initial 2 month period, either party can refer the matter to the Leasehold Valuation Tribunal (LVT) for determination. The LVT will then hear the cases and cross examinations from the parties and then make a determination based upon the evidence provided and their knowledge and experience. Freeholders mostly try and avoid LVT determinations as they have to bear their own costs and may receive less premium than via a negotiated settlement. Therefore the vast majority of cases are settled without an LVT hearing.

 

Lease Extensions Advice: Collective Enfranchisement

Posted on 17/06/13, filed under Fresh News

Three Things Leaseholders need to consider about Collective Enfranchisement

For leaseholders, when setting out to try to extend their leasehold in a block of flats there is often confusion on the procedure and their rights. The Leasehold Reform Housing and Urban Development Act 1993 and later the Commonhold and Leasehold Reform Act 2002, were brought in to provide rights to leaseholders to extend leases and to purchase the freehold of their blocks (Collective Enfranchisement). This is when the leaseholders of flats in a building collectively purchase the freehold, allowing them to then control the management of the building (and expenditure) and if their leases are short to extend their leases at no cost other than the legal fees. Three things leaseholders should consider are;

Eligibility, Are you eligible?
Eligibility is assessed by a valuation surveyor and eligibility for leaseholders is achieved if;
   •   Their flat is not held on a business lease
   •   They are not leasing from a charitable trust
   •   Can not be leasing two or more flats in the building
   •   Hold a ‘long lease’ of the property, (a long lease is qualified by any lease that is longer than twenty one years).

There must also be a majority of eligible leaseholders participating in the enfranchisement.

What is a Formal Participation Agreement?
It’s a legal contract to enable smooth running of the enfranchisement. This can be drawn up by a specialist enfranchisement solicitor, agreements such as this are important, as expenses are shared between the leaseholders, and a legally binding agreement provides security for individual tenant’s money. No matter how well you get along with your neighbours, we here at Sussex Lease Extensions recommend that anyone considering Collective Enfranchisement has a formal participation agreement drawn up so that all participating leaseholders are formally bound to proceed.

Election of a nominee purchaser
A nominee purchaser can be an individual, an agency or a collective company formed by the leaseholders. Most nominee purchasers are companies with each participating leaseholder having an equal share. When considering enfranchisement you may want to discuss with your fellow leaseholders what would be the best option for you as a collective and this usually depends upon the number of participating leaseholders.

Collective Enfranchisement can appear to be highly complicated but with specialist lease extension advice, the process can be simplified and provide many benefits to leaseholders. Allowing leaseholders to make decisions over their buildings maintenance and repairs, and by increasing the lease terms, it also increases the value of a property. With Sussex Lease Extensions helping to navigate leaseholders through this process, Collective Enfranchisement can enable leaseholders to have more control over their homes and usually a future annual cost saving.

Things to Look Out For When Choosing Lease Extension Valuers

Posted on 05/06/13, filed under Fresh News

Choosing the correct lease extension valuer can be the difference between a smooth, hassle-free process and a complex, costly and on some occasion’s unsuccessful process. Extending a lease can be a confusing procedure, but when done with a trustworthy expert lease valuer it doesn’t need to be a problem. But what should you be looking for when choosing a lease extension valuer?

Make sure they know what they are talking about

When choosing a lease extension valuer make sure you’ve checked their credentials. Firstly, are they a qualified member and a registered valuer of the Royal Institute of Chartered Surveyors (RICS)? If your valuation surveyor is a member of the RICS they are a part of a chartered institution and will have undertaken a considerable amount of studying to attain the professional qualification. However, it is not sufficient to merely be a member of the RICS, your chosen valuer must also be registered with the RICS as a valuer and should be experienced at Lease extension/enfranchisement work.

They should also be a member of the Association of Leasehold Enfranchisement Practitioners (ALEP). Membership of ALEP is only open to professionals (surveyors and solicitors) who specialise in this particular work. At Sussex Lease Extensions our lease extension valuers have over twenty years of experience as chartered surveyors specialising in lease extensions/enfrachisment valuation work throughout the South East.

Julian Wilkins, is our Primary Surveyor and is,

  • MRICS qualified, a Registered Valuer with the RICS and a member of ALEP
  • Qualified as a Chartered Surveyor in 1992
  • Has worked for a number of larger corporate surveying practices
  • Specialises in residential survey and valuation work and in particular Lease extension and enfranchisement valuation work
  • Represents clients at Leasehold Valuation Tribunals (LVT’S) both as expert witness and advocate.

Robin Holden BSc, is our senior surveyor,

  • MRICS qualified and a Registered Valuer with the RICS
  • Qualified as a Chartered Surveyor in 1990
  • Has worked for a both large corporate surveying practices and smaller local practices
  • Specialises in residential survey and valuation work

Can they provide case studies/testimonials?

Case studies are a great way to take a look at the company’s previous experience, allowing you to get a thorough understanding of what they are like to work with. When choosing a lease extension valuer look to see if they provide case studies or testimonials showing their previous work, if they don’t get in touch and ask if they have examples they can share with you.

We have undertaken hundreds of successful lease extensions and enfranchisement cases, including those which have been complex and difficult to settle. Take a look at our case study from a London valuation tribunal on the Sussex Lease Extensions blog.