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Leasehold houses - your rights to a longer lease and
to acquire your freehold and the new law extending your rights
(updated June 2006)
What Are My Rights To A Longer Lease Or To Acquire The Freehold?
Your rights to a longer lease or to acquire the freehold
of your leasehold house were first introduced by the Leasehold
Reform Act, 1967.
Under that Act, if you are a qualifying tenant and satisfy
a residence test, you have the right to a longer lease or
to acquire the freehold of your house.
Q: Am I a qualifying tenant?
A: To be a qualifying tenant you must own a long
lease of your house and must be paying a low rent.
• a long lease means a lease which was originally granted
for more than 21 years; it does not matter if there are less
than 21 years left. If you own the lease with somebody else,
you are together a qualifying tenant
• the low rent test has been abolished.
Q: Do I satisfy the residence test?
A: You satisfy the residence test if you (or another
person who owns your lease with you) have occupied your flat
as your only or main home for the last three years or for
three years in the last ten. This test has been abolished
by the new law; see below.
Q: What am I entitled to?
A: The longer lease to which you are entitled is
50 years added on to the number of years left on your existing
lease. Therefore, if your lease has 30 years left, you will
get a lease for 80 years. You are alternatively entitled (and
probably best advised in most cases) to apply for the freehold.
How Has The New Law Extended My Rights?
The new law is contained in The Commonhold and Leasehold Reform
Act 2002 and aims to make it easier to extend your lease or
to acquire your freehold by removing the tests referred to
above and replacing them with the simple requirement that
you have owned your long lease for at least two years. Thus
the rights to a longer lease or to acquire the freehold referred
to above are now also available:-
• in respect of a house or houses owned as second or
holiday homes
• in respect of a house or houses owned as investments
• to companies.
The two year ownership rule is designed to discourage the
acquisition of houses by speculators intending immediately
to extend leases or to acquire the freehold and then to sell
them at a profit.
What Must I Pay My Landlord For The Lease Extensions
Or Freehold And Have There Been Changes Here Also? What Are
The Costs Involved?
The calculation of the price payable to your landlord can
be complex and requires specialist valuation advice from a
surveyor at an early stage.
The valuation date is fixed as the date on which you give
notice to the landlord of your wish to extend your lease,
or to acquire your freehold, so that any delays in the process
thereafter do not result in an increased price due from you,
particularly in a rising market.
In addition to the price payable for the lease extension
or freehold you will also have to pay:-
• Your solicitor’s costs in taking the claim
through from the outset to completion and registration at
the Land Registry. Charles Russell’s costs are estimated
at £3,000.00 - £4,000.00 plus VAT and disbursements.
If the landlord is particularly obstructive or if a hearing
at the Leasehold Valuation Tribunal is necessary the costs
may be greater but in the vast majority of cases this is avoided.
• Your valuer’s costs
• Your landlord’s reasonable legal and valuation
fees which will be ascertained at the earliest opportunity.
• Stamp Duty Land Tax on the price paid for the lease
extension or freehold, as follows, at current rates:-
£0 - £125,000.00 nil
£125,001.00 - £250,000.00 1%
£250,001.00 - £500,000.00 3%
£500,001.00 plus 4%
• Land Registry fees usually below £500.00.
Why Should I Be Interested In These Rights?
The shortening of a long residential lease has a depreciating
effect on it. This depreciation accelerates the shorter the
remaining term becomes. Your right to require your landlord
to extend your lease or transfer the freehold to you enables
you to:
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stop the depreciation process and reinvest
in the property |
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avert a situation where prospective purchasers of your
house are put off because the lease is so short and/or
because they cannot find a lender prepared to lend on
security of such a short lease |
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protect the value of your dependants’ inheritance. |
How Charles Russell Can Help
Charles Russell have an experienced team of property
lawyers who have worked for many years within the framework
of this area of the law.
Charles Russell have direct contact with valuers qualified
to give prompt and practical advice on all valuation aspects,
enabling leaseholders’ claims to be taken forward effectively
and efficiently.
The Next Step
If you would like Charles Russell to advise further on your
claim to a lease extension or acquisition of the freehold
and the likely price involved please contact us with:
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a copy of your lease, or details of the
whereabouts of the title deeds to your house |
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a cheque in the sum of £500.00 on account of your
legal and valuation costs, made payable to Charles Russell
Client Account. |
Naturally before taking this step you will wish to discuss
matters further or in more detail with the author of this
article, Andrew Slatter, a partner in Charles Russell’s
London Office.
Naturally before taking this step you will wish to discuss
matters further or in more detail with the author of this
article, Andrew Slatter, a partner in Charles Russell's London
Office.
Contact details:
Andrew
Slatter, Partner, Charles Russell LLP
Tel - 020 7203 5159
Fax - 020 7203 5300
Email andrew.slatter@charlesrussell.co.uk |
