Understanding Leasehold and Lease Extensions
In Worthing, as in many other areas of the UK, leasehold is a common form of property ownership. Leasehold means that you own the property but not the land it stands on, which is owned by a freeholder. Leasehold properties typically have a lease agreement with a specific term, and as the lease term diminishes, the value of the property can be affected.
Lease extensions offer leaseholders the opportunity to extend the lease term, providing them with continued enjoyment of their property and preserving its market value. By extending the lease, you regain control over your property, removing the risk of it reverting to the freeholder at the end of the lease term.
Benefits of Leasehold Extensions
Extending your lease in Worthing can bring several benefits:
a) Added Value:
A property with a longer lease term is more appealing to potential buyers, increasing its market value and enhancing its saleability. Lease extensions can be seen as a proactive measure to safeguard your investment.
b) Peace of Mind:
Extending the lease gives you peace of mind, knowing that you have secure and continued ownership of your property. It eliminates the uncertainty and potential financial implications associated with lease expiration.
c) Flexibility and Control:
A lease extension allows you to maintain control over your property, enabling you to make alterations, improvements, and decisions regarding its management. It offers the freedom to enjoy your home without restrictive lease terms.
d) Avoiding Ground Rent Escalation:
Leasehold extensions often involve reducing or eliminating ground rent payments, which can save you significant sums of money over time.
The Lease Extension Process
While leasehold extensions in Worthing may appear daunting, understanding the process can help alleviate concerns:
a) Eligibility:
To qualify for a lease extension, you generally need to have owned the property for at least two years, although there may be exceptions. It is advisable to seek professional advice to determine your eligibility.
b) Valuation and Negotiation:
The lease extension process involves determining the premium, or the price you will pay to extend the lease. This valuation takes into account factors such as the remaining lease term, ground rent, property value, and any improvements made.
c) Serving a Section 42 Notice:
To initiate the lease extension process, you or your legal representative must serve a Section 42 Notice on the freeholder, expressing your intention to extend the lease. This formal notice sets out the proposed terms and triggers the legal procedure.
d) Negotiating Terms and Completing the Extension:
The freeholder has a statutory timeframe to respond to the Section 42 Notice, and negotiations may take place to agree on the terms of the extension. Once the terms are settled, the lease extension is completed, providing you with the extended lease term.
Seek Professional Guidance
Navigating the leasehold extension process in Worthing can be complex, and seeking professional guidance is highly recommended. A specialist solicitor or lease extension expert can provide invaluable assistance, ensuring you understand your rights, obligations, and the financial implications involved. They will guide you through each step of the process, from valuation to negotiation, and ensure that all legal requirements are met.
APA LEASE EXTENSIONS WORTHING
The 1993 Leasehold Reform Housing and Urban Development Act (as amended by the 1996 Housing Act and the Commonhold and Leasehold Reform Act 2002) gives a lessee the right to extend the lease, so long as the lessee has owned the flat for two years. The Act specifies that the extension to the lease is for 90 years added to the existing unexpired term and ground rent is expunged.
What is the basis of the valuation?
This forms three parts:
Diminution in the value of the Freeholder’s Interest :
This is what the freeholder is losing – essentially it is the capitalisation of the ground rent and the reversion.
Marriage value :
This is the value created by merging the existing leasehold interest with the new extended leasehold interest.
Compensation :
Compensation is payable to the freeholder if he sustains loss to any other property owned from the granting of the new lease. This category is extremely rare.
What is the procedure under the legislation?
Your solicitor will serve a Section 42 Initial Notice served on the freeholder stating what the flat comprises, details of the lease and the price offered for the premium.
Within two months the freeholder is required to serve a Counter Notice acknowledging the lessee’s right to a lease extension. Normally the freeholder, in his Counter Notice, will not agree to the figure that has been offered so negotiations then take place.
Hopefully a price can be agreed, but if not (which is rare), the lessee has six months from the date of the Counter-notice within which they can apply to the First Tier Tribunal (Property Chamber) who will determine the price to be paid.
Conclusion
Leasehold extensions in Worthing offer leaseholders the opportunity to secure their property’s future, maintain its value, and enjoy continued ownership. By understanding the benefits and undertaking the process with professional guidance, you can safeguard your investment and eliminate uncertainties associated with lease expiration. Taking proactive steps towards extending your lease empowers you to fully enjoy your property and provides peace of mind for years to come in the beautiful coastal town of Worthing.