Almost all flats (and some houses) in England and Wales are sold leasehold. Simply put, the freeholder owns the site and charges the leaseholder an annual ground rent. The leaseholder contributes to an annual service charge covering the cost of insuring, maintaining and repairing the building. Leasehold ownership gives the leaseholder the right to occupy and use the property for the ‘term’ of the lease – typically 99 or 125 years. At the end of term, when the lease expires, the property reverts to the freeholder.
Once the unexpired term falls below around 80 years, a leasehold interest increasingly becomes more difficult to sell; resulting in its value falling at an exponential rate. The leaseholder’s right to seek an extension to the term of the lease or buy the freehold is therefore of great importance to leaseholders to protect the value of their interest. This relationship between the freehold and leasehold value of a property is known as the ‘relativity’.
The Leasehold Reform, Housing & Urban Development Act 1993 (as amended) allows ‘qualifying tenants’ of flats and blocks of flats to either extend their lease for a term of 90 years at a ‘peppercorn’ rent, or, acting collectively, purchase the freehold of their building. The Leasehold Reform Act 1967 (as amended) allows a qualifying tenant of a house to purchase the freehold of his house.
We offer a service that takes our clients through the whole process efficiently and cost effectively to arrive at the best possible settlement. Our services incorporate both ‘Stage 1 Reporting’ and ‘Stage 2 Negotiations’. We also act as expert witness at tribunal where required.
Please find set out below headline details from a sample of recent instructions undertaken by JSRE’s lease reform team:
Advice in relation to, and the successful negotiation of, a lease extension on The Crown Estate. This property is located next to Regents Park and on a part of The Crown Estate, known as an ‘Excepted Area’ where the Estate’s undertaking given to Parliament to voluntarily comply with The Leasehold Reform Housing and Urban Development Act 1993 does not apply.
Advice in relation to the successful collective enfranchisement / freehold purchase of a Grade II* listed period building on Grosvenor Estate Belgravia.
Advice in relation to the successful statutory 90-year lease extension of a large lateral flat in a popular mansion block in Mayfair. The lease had only around 18 years remaining unexpired and therefore the premium was substantial at over £1 million. Notwithstanding, savings exceeding £150,000 were negotiated for the client from the landlord’s Counter Notice offer.