If you are a member of an enfranchised company, you could add add value to your property by extending your lease to a term of 999 years.
Why extend your lease?
As a member of an enfranchised freehold company, you own a share of the freehold.
The value of your leasehold property is dependent on the number of years remaining on your lease. In other words, the longer your lease the more valuable your property will be.
Part of the purpose of acquiring the freehold and paying a premium at the time of the enfranchisement is to then be able to grant yourself a 999 year lease for free.
There are advantages to extending your leases collectively with the other leaseholders. Firstly, this will allow for consistency in the terms of all your leases, which is always useful in a block of flats. Secondly, we can more easily provide discounts on our legal costs.
What is involved in extending your lease?
If the board agrees to go ahead with this process, we would be acting for both the company and the leaseholders.
We would draft new leases on similar terms as your current leases, except for some modernisation. This is always a good occasion to review the terms of your leases and ensure that there are no errors. You could also take this opportunity to make more substantial changes, but there would be extra legal fees for the additional work involved.
If you have a mortgage over your leasehold property, your mortgage lender will have to consent to the lease extension. This is because effectively, your current lease will be surrendered and your current leasehold title closed and replaced by a new one.
During this process, the mortgage lender’s charge will have to be transferred from the old title to the new one. It is important for any mortgage lender to ensure that their charge is not being compromised in any way. In your case, your mortgage lender could not reasonably withhold their consent given that you would be adding value to the property. This is therefore more of a formality, but carries an extra cost.
Once the terms of the leases are agreed and any relevant mortgage lenders have provided their consents, the parties would sign the new leases and we would then formally register the same at Land Registry.
How long does it take?
This process usually takes between one month and three months to complete. However, we are dependent on third parties’ response times as well (mortgage lenders and Land Registry) which can sometimes delay the process over an extra month or so.
How much will it cost?
As explained above, where the lessees own the freehold we would be acting for both the company and the leaseholders. This reduces the overall costs.
Please call CG Naylor LLP on 020 8371 7161 for a quote on non-statutory lease extensions for members of a freehold company.