Solicitors Specialising in Lease Extension and Freehold Purchase
If there is a short-lease problem in your block of flats, you have 2 great opportunities: you can extend your lease individually or join together with some of your fellow leaseholders to buy the freehold of the block (a process that is also known as leasehold, freehold or collective enfranchisement).
Both of these options have advantages and disadvantages. The real question is what is right for you.
Got a lease extension or freehold enfranchisement question? Call our specialist solicitors on FREEPHONE 0800 1404544 for FREE initial phone advice – with no strings attached.
6 great reasons why you should consider extending your lease
1) Leave things as they are, and your lease will run out. Eventually, when the term runs out entirely, you will no longer own your property.
2) As each year passes and your lease gets shorter, the premium (i.e. the price you will need to pay to your freeholder to extend a lease) becomes greater. And the biggest single leap in that premium occurs the day the term drops below 80 years. So whether you extend your lease or decide to buy your freehold, try to get the process started before that crucial 80 year stage.
3) Not only will the price of your UK lease extension rise the shorter your lease gets, but one factor that affects the premium is the value of your flat. So provided property prices are still rising, however slowly, that will also gradually increase the value of the premium you are eventually going to have to pay to extend your lease.
4) Few things are certain in life – but the whole point of the leasehold reform legislation was to encourage home ownership and to make leasehold extension attractive. That’s why the increased value of your property after extending your lease is almost certain to exceed the actual premium, legal and valuation cost of extending – provided you get proper advice from specialist lease extension surveyor on the right level of premium.
4) Short lease flats put off potential purchasers. They will probably be informed at some stage that they will need to extend the lease – and that’s another cost that they have to bear in mind. And that could mean you end up with an offer below market value, sometimes way below market value.
5.) Once your lease term drops under 70 to 75 years, you, or any prospective purchaser, are going to find it increasingly difficult to get a mortgage, or even to remortgage your flat. In the last few years, most lenders become increasingly cautious when it comes to granting mortgages on flats with short leases. And no mortgage usually means a cash buyer – and a much lower sale price.
6) lease extension is relatively easy. Unlike enfranchisement, as you will read below, you don’t need the cooperation of any of your fellow leaseholders. In short, provided you meet the criteria, you have a legal right to force your freeholder to extend your lease by further 90 years – whether they like it or not. Although it is also possible to come to an agreement with your freeholder to increase the lease by different length – though unlike the 90 year extension, you have no right to do so.
The downside of a lease extension?
Yes, there are reasons why you might not want to extend your lease – in particular, leasehold extension;
- unlike an application to buy your freehold, it doesn’t give the added benefits of freehold ownership
- the leaseholder will still have to pay the annual service charge for maintenance and regular ground rent costs too
- you have no direct control over the management of your block.
Click here to read more about lease extension
The benefits of buying your freehold
In short, leasehold enfranchisement provide you with greater rights than a simple single lease extension. In particular;
1.) buying your freehold increase the value of your property more than a simple 90 year lease extension
2.) it allows you to increase your lease term not just by 90 years – but to a full 999 years.
3.) As part of the process of granting a 999 year lease to yourself, you can make sure that the new lease is more in your favour. Many leases, for example, limit leaseholders on what they can and can’t do both inside and outside their flat. Some also require fees to be paid to your freeholder for the consent to changes – or sometimes even to sell the flat. Enfranchisement allows you to grant a brand-new lease – without those kind of limitations or restrictions, because you are now one of those freeholders.
4.) Buying the freehold of your block allows you to take over complete control of its management. With a small block you might choose to manage the block yourself. With larger blocks you can choose the right management company, which can sometimes massively reduce the cost of service charges.
Some Practical Problems with Enfranchisement
Buying your freehold isn’t always the best course of action though.
In most cases it probably is, but if there are lots of flats in the block concerned, or if many of the flats have only a short term remaining on the lease, it can be much harder to organise a collective enfranchisement. In particular, getting enough people on board on day one and keep them committed throughout the enfranchisement process can prove tough (although a well drafted participation agreement can really help to keep everyone committed).
What’s more, as the term remaining on a lease gets shorter, the cost for each participant goes up too. This means that often people are put off by the cost and choose not to go down the freehold purchase route. In cases where the leases concerned have 90 years or more to run the enfranchisement premium will be relatively small – but when the leases only have 20 years left the cost can be high enough to put off many of the leaseholders.
Click here to read more about how our lease enfranchisement solicitors can help you
NB you do want to take control of your block but can’t raise sufficient finance or organise enough of your fellow leaseholders to join in, the alternative is to exercise your right to manage.
Click here to read more about the Right To Manage and how it works
Specialist Leasehold Advice – Whatever Your Situation
When either buying a freehold or applying to extend your lease, you are dealing with some tricky parts of the law. And the vast majority of property solicitors don’t deal with lease extension or enfranchisement regularly – if ever.
So, the best advice is to look for a solicitor who is a true expert in this complex area of the law – rather than one who dabbles in several different legal areas. Having an expert solicitor who is not based locally and who you have to speak to on the phone or in a video call or communicate with by email, is always the best choice. It’s much better than using a local solicitor just because you prefer face to face meetings.
Using a specialist lease extension solicitor means that you shouldn’t come up against any unexpected costs or any pitfalls which can delay the process. Getting specialist legal advice doesn’t have to mean paying over the odds, and in the long run getting the experts may work out cheaper than employing a non-specialist local solicitor who makes a mistake or fails to spot potential delaying factors, and who ends up costing you more money.
Extend Your Lease or Buy Your Freehold? Our Leasehold solicitors are genuine specialists and can help – and here’s the proof
Here at Bonallack & Bishop, not only do we have over 25 years of experience in acting for both leaseholders and freeholders with both leasehold extension and freehold enfranchisement, but we handle around 500 of these cases each and every year. If you’re thinking of instructing other solicitor to extend your lease or buy your freehold – the 1st question to ask them is how many cases did they handle last year?
- the only solicitors recommended by The HomeOwners Alliance – we are the only firm recommended for lease extension and enfranchisement advice by the U.K.’s leading organisation representing and supporting 70 million homeowners
- long-standing members of members of ALEP (the Association of Leasehold Enfranchisement Practitioners) – the nation’s sole specialist group for leasehold extension and enfranchisement surveyors and solicitors.
- Progressive Approved Solicitors – one of only three law firms formally approved by Progressive Property – the nation’s most successful property investment education company, and the Buy To Let Property Facebook group.