Since 1979 millions of Britons have bought their home from their local council. And many of those properties are leasehold flats – all of which are going to need a lease extension at sometime or other (unless enough of the leaseholders join together to buy the freehold of the block in a process known as enfranchisement). As a result there are surprisingly number of people every year who are looking at extending the lease on their ex-Council flat. And here at Bonallack & Bishop we have plenty of experience in acting both for and against Councils and Local Authorities in lease extensions and freehold purchases.
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Your Ex-Council Flat – your legal right to extend your lease
Just like leaseholders of private non-council property, if you own an ex-Council flat in England and Wales, you will probably have the right to extend your lease. The right to extend your lease is governed by the Leasehold Reform, Housing and Urban Development Act 1993 (as amended), which sets out the criteria that must be met for you to qualify for an extension.
To qualify for a lease extension on your ex-Council flat:
- you must have owned the property for at least two years and
- have a lease that was originally granted for a term of more than 21 years.
If these conditions are met, you have a legal right to a lease extension of up to 90 years on top of the remaining term of your existing lease, and a reduction in the ground rent to a peppercorn (i.e., zero). This is known as the statutory or formal lease extension route – in contrast to the private or voluntary route whereby there is no form application made and you don’t have a right to lease extension – but can negotiate terms with the freeholder – in your case the council.
The alternative to this statutory route is what is known as a voluntary, informal or private lease extension. Our solicitors will be happy to advise you on what is right for your particular circumstances – but unlike statutory lease extensions, you have no right to a private lease extension and the other party, in this case the council, can refuse to carry on but 26 banner for 35 minutes) or change the terms at any stage.
What is the process of extending my lease?
If you are exercising your legal rights and using the formal statutory route, the process of extending the lease on an ex-Council flat is as follows:
- you will need to serve a formal notice on the Council. This notice must clearly specify the terms on which you are seeking an extension, including the proposed premium (i.e., the price you are willing to pay for the extension).
- once the notice has been served, the Council has a period of two months to respond with a counter-notice, which will either accept the terms set out in your notice or propose different terms, including a higher premium.
It’s worth noting that the process of extending your lease can be complex and time-consuming, and it’s recommended that you seek professional advice from a surveyor or solicitor who specializes in leasehold enfranchisement before proceeding.
How our specialist lease extension team can help you
We have been handling lease extension and freehold purchase cases for clients for around 25 years. And in that time we have helped around 10,000 people just like you extend their leases or buy the freehold. We suspect that very few law firms come anywhere near to that.
Not only that, although most local councils have their own in-house team, Winchester City Council now use us to handle all of their lease extensions – because after having us on the other side acting for ex council tenants, they realised we really knew what we were doing! And understanding the process, and the mindset from both sides when dealing with lease extensions on council flats is really useful
But don’t just take our word for it.
• Firstly – we are the only solicitors recommended for lease extension work by the HomeOwners Alliance – the nation’s premier organisation to support and champion the country’s 17 million homeowners.
• Secondly – click here to read dozens of reviews of our lease extension team from happy clients and experienced lease extension surveyors.
Are councils more difficult than private landlords when it comes to lease extensions?
No, at least not in our experience. You may be surprised to hear that Councils are, typically speaking, more co-operative in the lease extension process than some commercial landlords. Could this be because councils are not strictly speaking a ‘for profit’ business? Perhaps.
But the good news is that councils are normally perfectly cooperative if you want to extend your lease on your ex-Council property or join together with your fellow leaseholders who have exercised their right to buy and buy the freehold of your block
And here are just a few reasons why extending the lease on your flat could be easier with your local Council:
• Agreeing the premium you will need to pay do your local authority is often simpler – as councils tend to be much easier negotiating premiums. Unlike some private freeholders, they don’t tend to push for an unreasonably higher premium. In fact provided your offer is reasonable, local authorities will often accept the initial price contained in your original section 42 lease extension notice with no argument – provided it is reasonable. Alternatively, if you’re using the informal route, then it’s not unusual for the councils to suggest a price for the premium – and in general these tend to be quite reasonable, although sometimes there may be the need for a little negotiation to try and settle on a lower premium
• Councils often have an in house legal team alongside valuers that they employ. Because of this, it can often be easier to agree the terms of the lease extension than with a commercial landlord, as there are less parties involved
• Councils will often have fixed fees for their transactions which can make it easier for Clients to track their expenditure.
• Councils will often draft entirely new leases as opposed to simply extended the term on the existing one. The reason for this is Councils often take the chance to modernise a lot of the existing terms in the existing leases (the majority of which were granted in the 1900’s). Whilst this can lead to higher legal fees (as creating an entirely new lease involves more work than a simple deed of extension) it can often lead to more saleable lease for the leaseholder, as the terms of the same will be more up to date with current standards ;
• Councils will often have fixed fees for their transactions which can make it easier for Clients to plan their expenditure.
Council properties which have been acquired by way of the right to buy scheme will often also amend the lease during the extension process to reflect the fact that the leaseholder now owns the property fully.
Extending the lease on your ex-council flat – the formal or voluntary route?
As most councils are fairly open-minded to lease extension, it usually less important to consider using the statutory route.
Although many councils actually prefer the formal over the informal or private lease extension route, that’s really not a problem provided your solicitor really understand the procedure. In fact, in our experience larger councils, including many London boroughs, often insist on using the statutory lease extension route. One of the reasons councils seem to prefer the formality is the clarity and structure it brings – so everyone knows exactly what’s expected of them and the need to keep to a reasonable timetable.
However a significant number of councils do regularly offer informal lease extension deals provided the statutory criteria is met (i.e. there is a long lease and the owner has been the registered owner of the same for a period of two or more years). The good news here is that given the high level of local authority cooperation when it comes to lease extensions, private or voluntary lease extensions are often quicker and simpler than using the formal route.
Extending The Lease On An Ex-Council Flat – what will it cost me?
When looking into extending your lease, you will need to consider the following costs:
- the “premium” – the price you will need to pay to your freeholder for the lease extension. There is no standard figure. The price will be based on a number of factors, including the value of your property, current ground rent levels and years remaining in the current lease.
- the legal costs of your solicitor and surveyor’s valuation fees
- the local authority’s ‘reasonable costs’. In extending a lease on your flat, you need to pay for the “reasonable” legal and surveyor fees incurred by the council in dealing with your application
Your Ex-Council Flat – buying your freehold
As a leaseholder, you also have the right, with some or all of your fellow leaseholders, to join together to buy the freehold of your block. This type of freehold purchase is also referred to as collective, freehold or leasehold enfranchisement. And this right applies to ex-Council flats in exactly same way as privately built blocks. And our team have experience of freehold purchase for ex-Council tenants.
And, in brief, to qualify for enfranchisement, your building must have at least two flats, and at least 50% of leaseholders must take part. However if there are only two flats, both leaseholders must take part in the freehold purchase.
Freehold purchase is less common than lease extension – not least because of the need for the participation of other leaseholders, which can be particularly difficult to get and keep throughout the process with larger blocks.
And, of course, with ex-Council flats, there is no certainty that everyone of those flats in the block are now privately owned. Even to qualify for enfranchisement, at least two-thirds of those flats would have had to have been sold under right-to-buy and amongst that two-thirds, a majority of those leaseholders must be on board with the collective purchase of the freehold.
Click here to find more about how are specialist lease enfranchisement solicitors can help you
Extending the lease on an ex-council flat – how do I get started?
If you wish to proceed with a lease extension, usually a good idea to enquire directly with the Council in the first instance – to see if they would be willing to offer you an informal lease extension.
You may also wish to consult with an independent valuer, who will be able to give you a rough estimate for the premium payable for a lease extension. Over the years, Bonallack & Bishop have developed an informal panel of specialist surveyors who really understand lease extension valuation. Our experience tells us who are the valuers you can rely on (very few surveyors specialise in lease extension valuation) and our team are happy to introduce you to, or instruct a recommended valuer on your behalf, as part of our one-stop shop service.
Councils will often have fixed fees for their transactions which can make it easier for Clients to track their expenditure.