A Leasehold Valuation Tribunal - How Does It Apply to Buying A Freehold?

In 1993 a new law came into effect that permitted flat owners with a leasehold agreement to apply for their freehold right to buy. This meant that providing they could meet the basic conditions set down in this law, they could set about buying a freehold even if the landlord objected to the idea.

The law is known as the Leasehold Reform Housing and Urban Development Act 1993, and it applies solely to collective claims brought by a group of flat owners wishing to use their freehold right to buy.

The process of buying a freehold can take anything from around three months at the shortest to a lot longer if the landlord is 'hostile' and doesn't want to copyright.. One thing to remember however, if you are considering going down this route yourself, is that your landlord cannot simply say no to your freehold right to buy because he or she doesn't agree with it. The landlord has to have a valid statutory reason to block such an attempt.

Some landlords are happy to go through the process and will be amenable to negotiating on friendly terms when it comes to settling on a price for the freehold. However this does not apply to all cases. If the situation is hostile and no agreement can be made on a price, the case may eventually be referred to the Leasehold Valuation Tribunal- though thankfully, most landlords see sense and relatively few cases get to the LVT.

The Leasehold Valuation Tribunal is a body created to resolve this kind of dispute when it arises between a tenant (or in this case tenants) and a landlord. Needless to say it is always best if this can be avoided, although in some situations it is inevitable that the freehold right to buy will end up at the Leasehold Valuation Tribunal before it can be settled. If your own case does end up going to the LVT it will take longer to settle than it would have done on friendly terms.

This is one of the reasons why buying a freehold should ideally be done with the help of a solicitor specializing in freehold purchase cases. If your case should go to the tribunal your solicitor will handle the situation for you and make it far less stressful. Even if you do end up going down this route it does not mean your application for the freehold right to buy will be unsuccessful. It could merely take longer to complete before you can enjoy the benefits of being a freehold owner.

Thinking of buying a freehold property? Make sure you talk to Bonallack & Bishop first- Solicitors specialising in freehold purchase.

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What Rights do Leaseholders Have to Leasehold Extension?

Leaseholders can get an extension if they qualify for the legal right to do so. The legislation of the Leasehold Reform Act (1993) governs these criteria and enables an extension of up to 90 years.

The leaseholder should initially have the flat on what is termed as a long lease. That means it must have been granted for at least 21 years. He or she must have owned it for at least two years. The word "owned" is very important as they need not have necessarily lived there.

This two year ownership period can be circumvented if someone buys a flat. The buyer can use the seller's ownership period, and if this takes him over the two years he has a right to a leasehold extension.

In certain cases it is possible to gain a lease extension if the flat is on a short lease - one that is less than 21 years. In such cases the lease would have to have a clause granting the leaseholder the right to what is known as "perpetual lease renewal." This would have had to be agreed at the outset when the lease was first taken. Indeed, it would have had to have been made explicit, especially if there is a dispute with landlord when it comes to trying to extend a short lease.

Another way to secure a leasehold extension on a short lease is if there was a "Prince of Wales" clause in the original agreement. Like the "perpetual lease renewal" this should have been made implicit at the outset. With a Prince of Wales clause the lease would be terminable upon marriage, death or at an unknown date.

Even though the leaseholder may have the right - written into law - to extend the lease, difficulties may still arise. One of these difficulties could be the premium demanded by the freeholder. Even though the person holding the current lease can take the landlord to a Leasehold Valuation Tribunal with the aim of seeing the premium reduced to the market rate, this will only slow things down. And this can be a problem if the lease extension is being sought prior to the flat being sold with a buyer already having been found.

One final, but important, point - it is always critical to seek the services of specialist lease extension solicitors. Most solicitors rarely, if ever come across leasehold extensions - so getting the right one is really important. The right lease extension solicitor will be able to negotiate with the landlord from the outset and should be able to secure a swifter and more satisfactory resolution.

If you are considering getting a Leasehold Extension then speak to Bonallack & Bishop. If you want more information then contact one of their lease extension solicitors today. Senior Partner Tim Bishop is responsible for all major strategic decisions.

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What Is The Process For a Leasehold Extension?

To get an extension on their lease, the leaseholder must be 'qualifying'.

The original lease must have been for a residential property and should have been granted for a period of no less than 21 years. The person seeking the lease extension should have owned the flat for a minimum of two years. Ownership is the key-word here as he or she will not necessarily have had to have lived in the place.

The cost of the lease extension will be determined by several factors. One of these factors is the ground rent being paid, the period remaining on the current lease and the freeholder's reversionary interest. The latter is the difference value to the freeholder of the current lease and that of the proposed lease.

If the current lease has less than 80 years to run the freeholder is also entitled to a "marriage value" if the lease is extended. The marriage value is the difference between the current value of the property and what is likely to be at the end of the new lease. The percentage he receives is set by law and stands at 50 per cent.

One way in which the leaseholder can avoid this extra cost is to try and extend the lease before it has less than 80 years to run. So it is important to discover when the current lease started, and when it is due to finish.

When set to go through the process of extending your lease, it is advisable to seek the help and assistance of specialist lease extension solicitors. Not only will these solicitor be aware of the law surrounding leasehold extensions and be able to give sound professional advice, they will be able help with the process from start to finish.

A crucial part of the process is the negotiations with freeholder. Many freeholders will try and gain as much financial compensation as possible before agreeing to the lease being extended. The leaseholder will, quite naturally, try and keep costs down. While there is nothing to stop the leaseholder representing himself in the negotiations, this is best left to specialist lease extension solicitors. They will be able to help you through the procedural minefield involved in any leasehold extension - and will be well aware of tricks some unscrupulous landlords use to increase the price - e.g. appearing to agree to a voluntary lease extension when actually all they doing is delaying a tenant making a formal application until there are less than 80 years to run on the lease - when the marriage value can be added to the price of any leasehold extension.

Lease extension solicitors will know how to deal with a difficult freeholder during the negotiations. If negotiations go ahead really smoothly, it is even possible that the lease could be extended in a short a period as two months -though any sensible tenant will expect it to take longer.

Are you thinking of applying for a Leasehold Extension? Get in touch with one of the specialist Lease Extension Solicitors at Bonallack & Bishop today.

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