Latest News Article "A wake-up call to property owners who allow others to occupy land they own as if it were the squatters' own land" View Articles >   Please contact us on 0208 989 3000 or email tmurphy@huggins-law.co.uk Houses (1) THE RIGHT TO PURCHASE YOUR FREEHOLD Under the Leasehold Reform Act 1967 (as amended by the Leasehold Reform Housing & Urban Development Act 1993 and the Commonhold and Leasehold Reform Act 2002), as the leasehold owner of your house, you have the right to buy the freehold from your Landlord. Qualification Generally, you will collectively qualify under the Act if:- the building is a “house” as a matter of law your lease is a “long lease” i.e. the term is longer than 21 years (please note that there are different rules for business tenants and some specific shorter leases also qualify); and you have owned your house for at least 2 years.** As the requirements for low rent and for a leaseholder to be resident in their house has now been abolished, owners who do not actually occupy their houses (i.e. investors) and companies can also now purchase their freeholds. As you have a legal right, your Landlord may object to you purchasing the freehold only on one very specific ground. Your landlord can refuse to sell it to you only if he can prove to a court that he purchased the freehold prior to 15th February 1966, that he wants the house back as his only or main residence or for that of members of his family, and he makes an application for possession. If the Landlord succeeds, you will be entitled to compensation. (**Please note that there are certain specific exceptions to the above statements. For more details, please contact us here at Huggins). Cost You will have to pay your Landlord for the right to buy the freehold and the premium payable is based upon a complex valuation. There are various valuation methods and the correct one will depend upon whether you qualify for the right to buy the freehold under the old 1967 Act or whether you qualify under the amendments made by the 1993 and 2002 Acts. The 1967 Act valuation is lower as it does not include “marriage value” (the increase in the value of the property which occurs when the leasehold and the freehold interests become owned by the same person). If your lease has fewer than 80 years left on the term and you only qualify under the new 1993 or 2002 Acts, the valuation will include 50% of any marriage value payable. As you must propose a realistic price for the extension, we would advise that you obtain a professional valuation by a reputable Surveyor. Here at Huggins we have a good working relationship with several firms experienced in the requirements of enfranchisement valuations and their charges normally range from £450 - £600 plus VAT depending on the circumstances. You will also have to pay the Landlord’s reasonable legal and valuation costs incurred in the transaction together with any taxes payable and Land Registry fees. Our costs are dependant upon several factors but will be based on advising you of your rights and carrying out the legal formalities involved in exercising your right, including the conveyancing. If we can, we will approach your Landlord in the early stages with a view to negotiating the purchase on an informal basis, saving you both time and expense. If this is not possible however, either because the Landlord wishes to use the more formal statutory process, or because parties are unable to agree on the price for the freehold, we will be required to proceed with serving notices under the Act according to a strict timetable. If the Landlord refuses to participate in the process or agreement cannot be reached, we may have to enforce your rights at Court or make a claim at the Leasehold Valuation Tribunal. If you would like Huggins to act on your behalf in the exercise of your right to purchase the freehold, we will be able to discuss more specific costs with you. At Huggins we can advise and guide you through the complex and technical statutory process of exercising your right to purchase the freehold and we look forward to discussing this opportunity with you. Please contact us on 0208 989 3000 or email tmurphy@huggins-law.co.uk (2) LEASE EXTENSION Under the Leasehold Reform Act 1967 (as amended by the Leasehold Development Housing and Urban Development Act 1993 and the Commonhold and Leasehold Reform Act 2002), as the leasehold owner of a house, you have the right to extend your existing lease by 50 years at a modern ground rent In effect this means that you will obtain a new lease for the remainder of your existing lease plus an additional 50 years with the new ground rent only becoming payable once the existing term has expired. The terms of the new lease (save for the term and the rent) will be the same as your existing lease. As mentioned previously, the value of your leasehold house reduces as your lease comes closer to the end of the term – it is a ‘wasting asset’. This is important to consider if you want to sell your property in the future because mortgage lenders will not lend money to your potential buyer if the lease over your property has fewer than 70 years left, or they will lend but only on very unappealing terms. If you do not wish to or do not qualify for purchasing the freehold, extending your lease as early as possible is a worthwhile investment. Qualification Generally, you will qualify under the Act if:- your lease is a “long lease” i.e. the term is longer than 21 years (please note that there are different rules for business tenants and some specific shorter leases also qualify); and you have owned your flat for at least 2 years (please note that there are different rules for business and some other types of tenants).** As the requirement for a leaseholder to be resident in their house has now been abolished, owners who do not actually occupy their flats (i.e. investors) and companies can also now extend their leases. As you have a legal right, your Landlord may object to extending your lease only on very specific grounds. Your landlord can refuse to grant you the extension only if he can prove to a court that he (1) intends to demolish and redevelop the whole or a substantial part of your house (this only applies however where the unexpired term of your lease is less than five years from the date when the notice was served): or (2) that he purchased the freehold prior to 15th February 1966, that he wants the house back as his only or main residence or for that of members of his family, and he makes an application for possession. If the Landlord succeeds, you will be entitled to compensation. (**Please note that there are certain specific exceptions to the above statements. For more details, please contact us here at Huggins). Cost You will have to pay your Landlord for the extension and the premium payable is based upon a complex valuation. There are various valuation methods and the correct one will depend upon whether you qualify for the right under the old 1967 Act or whether you qualify under the amendments made by the 1993 and 2002 Acts. The 1967 Act valuation is lower as it does not include “marriage value” (the increase in the value of the property which occurs when the leasehold and the freehold interests become owned by the same person). If your lease has fewer than 80 years left on the term and you only qualify under the new 1993 or 2002 Acts, the valuation will include 50% of any marriage value payable. As you must propose a realistic price for the extension, we would advise that you obtain a professional valuation by a reputable Surveyor. Here at Huggins we have a good working relationship with several firms experienced in the requirements of enfranchisement valuations and their charges normally range from £450 - £600 plus VAT depending on the circumstances. You will also have to pay the Landlord’s reasonable legal and valuation costs incurred in the transaction together with any Stamp Duty Land Taxes payable and Land Registry fees. Our costs are dependant upon several factors but will be based on advising you of your rights and carrying out the legal formalities involved in exercising your right, including the conveyancing. If we can, we will approach your Landlord in the early stages with a view to negotiating the extension on an informal basis, saving you both time and expense. If this is not possible however, either because the Landlord wishes to use the more formal statutory process, or because parties are unable to agree on the price for the extension, we will be required to proceed with serving notices under the Act according to a strict timetable. If the Landlord refuses to participate in the process or agreement cannot be reached, we may have to enforce your rights at Court or make a claim at the Leasehold Valuation Tribunal. If you would like Huggins to act on your behalf in the exercise of your right to extend your lease, we will be able to discuss more specific costs with you. At Huggins we can advise and guide you through the complex and technical statutory process of exercising your right to extend your lease and we look forward to discussing this opportunity with you. Please contact us on 0208 989 3000 or tmurphy@huggins-law.co.uk " This guide is intended as general information only and it does not seek to summarise the relevant legislation which is a complex and technical area of law. This guide should therefore not be relied upon and you should take specific professional legal advice relating to your personal circumstances prior to proceeding with enfranchisement."