Under the Leasehold Reform, Housing and Urban Development Act 1993, if you own a flat then you have the right to extend your lease by 90 years at a nil ground rent. This is an individual right given to all flat owners if they satisfy certain criteria:
1. the flat must be held under a long lease i.e. it was originally granted for a term of more than 21 years;
2. the flat must have been owned by you for more than two years. This date starts from when you are registered as the owner at the Land Registry. It is not necessary for you to have lived at the flat
There are some exceptions: e.g. the landlord is a charitable housing trust. Alternatively, if you have previously made a claim you cannot make a new one until at least a year has elapsed. There are other exemptions to be aware of, please contact us for further information.
As the length of a lease decreases so does its value:
1. you pay more to extend your lease if it has less than 80 years left;
2. you will find it difficult to sell your flat if the unexpired term of your lease is less than the criteria set by most lenders. Most lenders require an unexpired term of at least 60 years.
You will have to pay a premium to the landlord to grant the lease extension. You will also have to pay your own legal costs together with disbursements and specialist valuation report costs.
Under the legislation you are also liable for the landlord’s legal and valuation report costs.
If terms cannot be agreed you will have to use the First Tier Tribunal (FTT). In this scenario, the costs would be much higher. Finally, you pay a deposit of 10% of the agreed premium.
There are strict time limits governing the process. Generally, it takes between 6 and 9 months.