Q: Why should I extend the lease of my property?
A: In short, to add value to your property. A lease is a diminishing asset and problems arise when an owner wants to sell or remortgage. Purchasers prefer longer leases, while mortgage providers are reluctant to lend on less than 70 years' unexpired. The longer leaseholders wait to extend their lease, the more costly it may be when it comes time to renew.
Q: What is a leasehold reform valuation?
A: Simply put, leasehold reform valuations are a multiplier of the ground rent payable for the term (adopting yield referred to as capitalisation rate), then arriving at the current value of the property assuming the freeholder will not own it until the lease expires, which is why we use a deferment rate. In cases with less than 80 years unexpired on its term, we apply a marriage value.
Q: What is the Leasehold Reform, Housing and Urban development Act 1993?
A: It allows lessees to extend their lease by 90 years at a peppercorn ground rent in exchange for paying a premium and some costs, or in some cases, to club together with their neighbours and buy the freehold of the lock. The longer the lease, the cheaper it is to do.
Q: What happens when a tenancy runs out?
A: Schedule 10 of the Local Government and Housing Act 1989 provides security for residential tenants of long leases to remain in occupation provided that leaseholders meet two requirements:
- There must be a long (more than 21 years) residential lease at a low rent (as the Act defines)
- They must be in occupation and the property must be their principal home. Where the landlord seeks to recover possession of the flat, the tenant must remain in occupation at the date of any Court hearing for possession.
Certain properties are excluded, be sure to ask if yours qualifies for an exemption.
Q: What is an assured tenancy?
A: An assured periodic tenancy under the 1989 Act is a monthly, secure tenancy at a market-level rent. The new terms will be fixed by a Rent Assessment Committee in default of an agreement. The lessee will no longer have rights of ownership. The rent, to qualify as an assured tenancy, must be more than £1000pa in Greater London. If the tenant agrees to the terms, then they won't need to do anything as the new tenancy will take effect from the date in the landlord's notice.
Q: How easy is it to purchase my home's freehold?
A: Actually easier than you think. Leasehold property owners may find themselves in a dispute with their freeholders, which can be overcome by simply buying the freehold. There are eight steps you can take to purchase your freehold, which are outlined here.