All flats and maisonettes have to be (for reasons beyond the scope of this guide) leasehold. A lease when initially granted is generally for a period between 99 and 999 years. Commonly leases are 99 years or 125 years in length.

Unfortunately, as time passes and the lease becomes shorter, this can have an adverse affect on the value and marketability of the flat or maisonette.

Typically, once the lease is below, say, 75 years some buyers will be unwilling to commit themselves to a purchase. Once the lease is substantially less than 70 years in length, then marketability becomes a serious issue.

Until 1993 there was very little that the owner of a flat could do about this situation and flat owners were often held to ransom by unscrupulous freeholders demanding unrealistic prices for an extension of the lease or the sale of the freehold.

In 1993, however, Parliament passed a Leasehold Reform (Housing & Urban Development) Act 1993. This Act (as subsequently amended) gave leaseholders the right to extend the lease whether or not the freeholder agreed.

To give you some indication of the issues involved we set out below some of the basic provisions of the legislation governing extension of leases in these circumstances:-

• If you extend your lease under the 1993 Act you achieve an extension of the lease by 90 years. In other words if you have, say, a lease with 50 years left, after extension under the Act you will have a lease with 140 years left to run. In addition, if you extend under the 1993 Act you achieve a nil ground rent.
• It is more difficult to extend a lease if part of the building is used for commercial purposes. We can advise you in detail on this situation.
• You need to have owned the flat or maisonette for two years before you can extend the lease under the 1993 Act.
• You do not, however, any longer need to have resided at the premises. In other words, even if you are a buy to let property investor or if the property is owned by a company you can still extend the lease.
• If you extend the lease you still obviously need to pay the landlord for the extension. If you cannot agree a figure with the landlord then an application may be made to the Leasehold Valuation Tribunal which is similar to a court and which will come to a decision which will be binding both on the freeholder and the tenant.
• The basis of calculation of the amount payable to the freeholder for an extension of the lease is based on the length of the lease together with the amount of the ground rent. The calculation is quite complex and we can advise you on this point (see below).
• It is particularly advantageous to extend the lease before the lease gets to be 80 years or shorter as then part of the value calculation is not applicable thus reducing the amount paid.
• You can proceed to extend your lease even if the landlord is unknown or cannot be contacted as the Act provides for procedures in this case, although you will still need to pay into the Leasehold Valuation Tribunal the same sum as if the landlord had been contactable.
• If you proceed to extend your lease it is usually necessary to pay not only your own costs but also the freeholders surveyors and legal costs.
• If the freeholder knows that you are aware of your rights under the 1993 Act it may be possible to reach an amicable agreement with the freeholder of the amount to be paid for extending the lease.
• It is in some cases possible if you are buying a flat with a short lease to obtain the benefit of the sellers previous occupation of the flat. Obviously, as a new purchaser of the property you will not qualify under the Act as you have not owned the property for two years. The seller of the flat can, however, (provided he has owned the property for at least two years) serve notice on the landlord before the sale takes place requiring an extension. The seller can then transfer the benefit of this notice to you so that you effectively obtain the benefit of the sellers previous occupation of the property which would enable you to proceed to force an extension of the lease immediately.

We are able to advise you on the likely premium that you will need to pay to your freeholder to extend the Lease. We are able to offer this service at a cost of £150.00 plus VAT which we believe compares very favourably with other valuation services.

In some cases it is possible to co-operate with the other owners of flats in a block to purchase the freehold of the block.

The Leasehold Advisory website provides information about the extension and enfranchisement of leases and provides a schedule of Leasehold Valuation Tribunal decisions.