Expert legal advice needed when extending leaseholds or buying freeholds
Howeowners seeking to extend leaseholds or to purchase freehold titles to their properties should seek expert advice to achieve successful outcomes, according to Thursfields Solicitors.
Lauren Bryan, a property dispute specialist lawyer at Thursfields’ Kidderminster office, was speaking after a recent case where the owner of a leasehold flat who expected to pay around £20,000 to extend their lease was asked for £42,000.
A large part of the higher-than-expected premium was for something called “marriage value” which leaseholders’ campaign groups want abolished.
Lauren explained: “When buying a leasehold property, homeowners do not possess it outright forever but gain a right to occupy it for a set number of years.
“On first sale, the lease might have been for 99 years, or more commonly in recent decades 125 years.
“When the flat is resold, the number of years remaining is also sold, and then at any point the new owner can ask to buy more years to extend the lease or, if certain conditions are met, can apply to buy the freehold.
“At this stage, the premium for the leaseholder will be calculated to include a payment for the extra years but might also include a sum to offset the ground rent the freeholder may lose.
“On top of this, extensions for a flat with fewer than 80 years remaining will attract a third payment, called marriage value.”
Lauren said it was estimated that this market could be worth around £2.5 billion a year, and that about a fifth of the 100,000 or so renewals per year may be for properties where marriage value is payable.
She said this was a controversial area that leaseholder groups want reformed, while for freehold investors it’s a profitable source of revenue they do not want to lose.
Lauren added: “The Law Commission is considering whether to recommend leasehold reform, but regardless of this outcome we always advise homeowners to seek specialist legal advice when applying to extend leaseholds or to buy freeholds.
“Thursfields has great experience in these cases and can help both with the application process and the negotiations, always aiming at getting the best result for the residents involved.”
Anyone wanting advice on leaseholds or freeholds can contact Lauren Bryan at email@example.com or on 01562 512 471.