May 1, 2024

Extending Your Lease with a Freeholder Living in Your Building

A situation arises when a leaseholder seeks to extend their lease and their freeholder happens to reside in the same...

A situation arises when a leaseholder seeks to extend their lease and their freeholder happens to reside in the same building. 

Owning a Share of the Freehold as a Leaseholder

If both parties possess leases of equal length, the valuation process can be bypassed, and they can proceed directly to a solicitor for deeds of variation, typically extending the lease to 999 years.

However, when lease lengths differ, one party may compensate the other for the disparity in valuations, necessitating the expertise of a specialised surveyor. This discrepancy is less significant for leases exceeding 80 years and not subject to marriage value.

Opting for the informal route, which circumvents the formal serving of a S42 Notice, can result in substantial savings on legal fees.

Leases Over 80 Years

For leases exceeding 80 years, where marriage value isn't applicable, the extension price primarily revolves around compensating for the loss of ground rent. While property value remains a factor up to 80 and 99 years, its influence diminishes beyond this point.

Considering a Single Joint Expert report can mitigate conflicts of interest, with each party receiving a single impartial valuation report, thereby avoiding duplication of fees.

Leases Below 80 Years

For leases below 80 years, extension costs increase as lease terms decrease, necessitating careful consideration. Using a Lease Extension Calculator can provide a starting point for the valuation.

In the formal route, involving the leaseholder serving a S42 Notice, fairness in actions is crucial. While it's advisable not to prioritize cost-saving measures excessively, selecting a mid-range firm for valuation and legal services is generally prudent. Ultimately, the freeholder retains discretion in settling negotiations, thereby guiding the surveyor's instructions.

In conclusion, while fairness concerns may arise, navigating lease extensions in such scenarios requires careful consideration. Seeking assistance from experts or contacting our team for further guidance can be beneficial given the complexities involved.