Under a number of Acts of Parliament including the
Leasehold Reform Act 1967 and the Leasehold Reform,
Housing and Urban Development Act 1993, as amended by
the Commonhold and Leasehold Reform Act 2002, owners
of leasehold residential property have rights to extend
their lease term.
Under the Leasehold Reform, Housing and Urban Development
Act 1993, if you have owned your flat for at least two
years you may be entitled to extend your lease, this
extension being for a term of 90 years plus the unexpired
term of your existing lease. This right is available
whether or not the leaseholder is resident in the property.
Historically most older residential leases were granted
for between 99 and 125 years. At the expiration of the
lease ownership of the property would revert to the
freeholder. This situation is usually avoided by the
purchase of a lease extension from the freeholder, the
price paid reflecting the loss of that reversionary
value, future ground rent income and, where the remaining
lease term is below 80 years, marriage value. Marriage
value recognises the increase in the value of the property
arising from the grant of a new lease. Under the terms
of the Act this value is divided equally between the
parties. The Lessee must pay the freeholder's legal
and valuation costs.
If the parties can not agree the value then the matter
can be referred to the Leasehold Valuation Tribunal.
It will be clear from the above that both parties will
need specialist advice to determine their best course
of action. We have been acting in these cases for several
years and have built up a substantial base of knowledge
on the valuation principles required to assist both
Freeholders and Leaseholders.
If you wish to investigate the possibility of extending
your lease term, or if your landlord has already quoted
a figure for extending, make sure you get professional
advice to ensure that the terms are fair.