Further reforms are promised for those owning long-term residential leases. In 2022 we had an end to rents being charged for new long-term residential leases. Now the Parliamentary process has begun to address other issues relating to leasehold ownership. It remains to be seen if there is sufficient Parliamentary time, in what will be an election year, for the proposed changes to become law. As they are aimed at improving ownership, it is to be hoped that they would win cross-party support irrespective of the outcome of an election.
In this article Sanjeev Harash highlights reforms aimed at improving a long leaseholder right to extend the period of their lease. This often arises when the remaining period gets to a point where lenders will not accept it. While each lender requirements differ, a period left for the lease of between 60 to 90 years is common. Anyone acquiring, even without a mortgage, should bear in mind that they will in sell and face buyers with that requirement. There is a right for qualifying properties to extend their lease but some of the requirements have been a cause of frustration and as a result the alterations being proposed include:
- Removing the requirement that the owner must have owned for 2 years before extending.
- Increasing the period of any such extension to 990 years rather than the present 90 years.
- Changing the valuation formula to reduce the impact whereby the less the period left the more the impact on the sum to be paid for the extension.
- Making qualification easier for mixed-use buildings where the flats share a structure with non-residential property such as shops or offices. While not removing altogether the exception the proposal is to increase the percentage of non-residential use that precludes the extension from 25% to 50% of floorspace
While an extended lease can be compelled through the legal system the majority tend to be negotiated. Legal and surveyors’ costs for the freeholder must be met in addition to the premium for the extended period, with many as a result being negotiated to sit beside a sale.
If you would like to discuss the process and procedures and discuss any practical points, please do not hesitate to contact me, Sanjeev Harash, on 01404 548068 or email sanjeevharash@wbw.co.uk.
WBW Solicitors has offices in Axminster, Bovey Tracey, Brixham, Chard, Exeter, Exmouth, Honiton, Launceston, Newton Abbot, Paignton, Seaton, Sidmouth, and Torquay.
This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice. All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.
