Leasehold Enfranchisement & Extension
- Valuation of the premium payable to extend the leasehold interest in a residential property.
- Assessment of the enfranchisement premium where a leaseholders of a block of flats wish to collectively purchase the freehold.
- Professional advice for leaseholder (tenant) or freeholder (lessee / landlord).
Many flats, and a few houses, are owned by a lease which will eventually expire. As the term becomes shorter the owner will see a drop in their property's value. This situation is reversible, but can be costly. Curchod & Co are experienced in valuing the premiums payable to the landlord, by the leaseholder. We can assist with negotiations on the values between landlord and tenant, and encourage a settlement, although we have made representations at Tribunal.
Legislation including the Leasehold Reform, Housing & Urban Development Act 1993 and the Commonhold and Leasehold Reform Act 2002, together with Tribunal and some Court rulings, provides a basis for the extension of leases, or a freehold purchase. Lease extensions on flats normally add 90 years to the existing unexpired lease, reducing the ground rent to zero. The flat must have been owned for at least 2 years. For enfranchisement there are many rules including that there must be at least 2 flats, at least 50% of leaseholders must participate each of whom may own no more than 2 flats no more than 25% of the floor area can be non-residential (shops and offices), the freeholder cannot be a resident of a properties with less than five flats that were converted by that freeholder.
- Shorter leases have a lesser value and the premiums will be higher.
- Premiums compensate the landlord for the loss of future ground rent income.
- Premiums compensate the lessee for their deferred ownership, or their being forced to sell the freehold.
- Leases of less than 80 years will be subject to marriage value (50% of the difference between the original short lease and the extended lease ownership market values). This can be considerable.
- Leases of less than 70 years can be difficult to mortgage and to sell.