7th August 2017
Nothing much happens in the world of residential Leaseholds from one year to the next – not since the wonderfully named Mr Sportelli took on the Cadogan Estate back in 2007, and sort of lost. In fact, prior to then the best name in the case law, that I knew of, was a Mr Yianni who took on a mortgage valuer called Edwin Evans back in 1981, and sort of won. I’ll tell you about that one day.
But then this year there has been a furore about leaseholds as some developers have found themselves in the spotlight for selling properties with tricky little leases which hike the ground rent up at an alarming rate – maybe I’ll do a piece on that too, if the lawyers will let me.
Today however, I just wanted to tell you a little about leasehold extensions as they apply to flats, maisonettes (which are flats with their own front door) and apartments (which are posh flats).
Remember Jules Verne and how he went around the world in 80 days, well hang on to 80, because 80 years is important when it comes to lease extension prices. Once your lease falls below 80 years you have to pay, as part of the price, one half of the difference between what your flat is worth now and what your flat will be worth once you’ve extended the lease – what’s called the marriage value - and, as the lease gets shorter, the gap widens and the costs rise.
Once you’ve owned the flat for 2 years you are entitled to a 90 year extension to your lease at a peppercorn ground rent, but its not always easy persuading the freeholder to play ball, in which case you may have to serve a section 42 notice and, if needs be, head off to the Lower Tier of the Property Chamber Court and have them determine the price – I think the waiting list to get into Court is over a year at the moment.
Before you can do that though, you need to know what a realistic price for the extension is, so that is where RICS Registered Valuers such as me come in. Remember, however, the time to do this is when you aren’t under a time pressure, not when you’ve found a buyer for your flat and your buyer’s solicitor notices you’ve only 70 years on your lease and the freeholder has you over a barrel!