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Lease Extension

I need to sell my maisonette, which has a 65 year lease. I have a buyer, but the lender will not provide funds until the lease has been extended. The freeholder advised me to get an independent valuation to increase the lease by 90 years and submit this as my offer. This was valued at £8,250 and cost me more than £500. The freeholder ignored this and is demanding £25,000. I must sell quickly to cover debts, and I cannot afford to go to arbitration. What are my options?

Most leaseholders of flats in England and Wales have a legal right to ask their landlord (freeholder) to sell them a 90-year lease extension and to do so at a fair price. This is an important right, as a shortened lease damages the value of the property and can make it difficult to sell. A leaseholder must own a flat for at lease two years to have this right.

Buying a lease extension often takes months but you can sell the lease extension right once you have started the formal process. First you need to get a chartered surveyor to value your lease extension, then you serve an official notice telling the landlord you are demanding to buy a lease extension and make an offer. The landlord has two months to reply with a counter notice that agrees with your price, disputes your right to a lease extension or demands a higher price. You must pay your landlords reasonable costs for handling your notice.

If you cannot agree on the price, you then apply to a Leasehold Valuation Tribunal (LVT), a quasi-judicial body that decides on the price. You must apply between two and six months after the landlord’s counter notice. The good news is you can transfer, or ‘assign’, your lease extension application to a buyer, so he or she does not have to wait two years before extending the lease. Most lease extension applications are settled in a negotiated deal with the landlord before an LVT hearing is held.

It is important to use a specialist solicitor and surveyor. Be sure your offer price is reasonable, as a landlord can seek to have your notice declared invalid by a county court if it is absurdly low. The law sets out the formula for calculating the value of the lease extensions, based on the market value of a flat, the amount of ground rent paid, expected appreciation in value and the risk profile of the property.

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