Those who are leaseholders of long leases may find it difficult to find a buyer if the lease is not quite long enough. Leases of less than 70 years remaining on the term are likely to be unacceptable to lenders and therefore saleable. It is also worth considering a lease extension as this is most likely to increase the value of the property.
You are able to approach your landlord for a lease extension by requesting a new lease. In the event that your landlord is unresponsive or simply refuses to grant the extension/new lease without reason, a possible solution to your problem may be found in statute. As a tenant of a long lease, you may have a legal right to request an extension from your landlord by requesting the grant of a new lease.
To be eligible, you must have been the owner of a long lease for at least two years before making a claim. The main qualification for a long lease is if the lease is for more than 21 years when it was originally granted to you. There are other types of long leases which do qualify but you should seek legal advice to ascertain whether your particular lease qualifies.
Prior to taking any steps, however, it is necessary, for the purposes of serving a notice, to be able to identify your landlord and anyone else who may have an interest in the property also. A valuation will be required to determine the value which should be payable for the new lease. You will also need to consider if you want to vary any other terms of the existing lease and put together a proposal. This can be your opportunity to propose terms which will ultimately be more beneficial to you or proceed on the basis that you are happy with the existing terms apart from the length of the lease.
The next step is to serve a notice on your landlord and anyone else with an interest. There are certain statutory requirements which will need to be complied with and legal advice should be sought to ensure the procedures are carried out correctly and you are able to construct a suitable lease proposal.
The landlord is required to respond to the notice by serving a counter notice to either: accept your claim and grant you a new lease; not accept your claim on the basis that they think you do not qualify for a new lease; or refuse to grant a new lease on the basis that they require the property for redevelopment purposes.
In the event of the second and third option, the landlord will be required to make a court application but the third option will only usually be available if the lease is due to end within five years.
Where your landlord fails to respond or does not follow the correct procedure, you will be able to apply for a court order for the grant of the new lease on the terms proposed by you when serving the initial notice, achieving the lease extension. Even if the landlord does comply with the procedure, there are very limited defences available to him to refuse your request.
As mentioned earlier, not only is a lease extension more attractive to lenders and thus increases saleability but it will also increase the market value of your property resulting in a higher purchase price.
There are, however, cost implications! Where you are considering this option it is likely that a compliant landlord will expect you to cover the cost of the new lease, to provide a deposit and allow access to the property for valuation purposes. This is on top of the premium that you will be expected to pay for the new lease. There are also the court costs associated with putting in place your new lease and even more so, if you are dealing with a non-compliant landlord!
Other rights may also exist and should be explored, especially if you are not the only tenant within a building looking to extend their lease. In this event, collective enfranchisement rights may also be applicable and further legal advice on this area should be sought.