Welcome to Extend Now!
Thinking of extending your lease or buying the freehold in North London? At Extend Now, part of Gilmartin Ley Chartered Surveyors, we provide the expert valuation advice you need. Our service does not stop with the completion of the valuation report - we have a good track record for negotiating fair settlements for our customers, and offer an excellent "after sales service".
Did you know..... the law enables you to extend your lease by 90 years e.g. if there are presently 76 years remaining, you can obtain an extension to 166 years. This applies whether or not the landlord agrees. The law does not prohibit you from agreeing other sorts of lease extensions "outside the Act" with your landlord - it is just that the only sort of lease extension the law forces your landlord to grant is the 90 year one.
Alternatively, providing you form a group with a sufficient number of the other leaseholders in the building, the law grants you the right to buy the freehold (also known as "collective enfranchisement").
While asking your freeholder / landlord to quote you a price for extending your lease is often a good starting point, don't make the mistake of assuming this is reasonable - get some valuation advice!
Is now a good time to extend my lease or buy the freehold?
While it has been tested many times, and occasionally tribunals have accepted different rates, the rates established in Sportelli for valuing the freeholder's reversion (that is the freeholder's interest at the expiry of the lease) prevail. These are known as 'deferment rates' and, Sportelli established this at 5.00% for flats. While all the properties in the Sportelli case were in Prime Central London (PCL), it was effectively stated that there was no reason for the rate not to apply nationwide. This is the current position and it may change in the future.
Assuming that the rates established in Sportelli continue to apply, the two most significant factors which influence the price payable for a lease extension or a freehold purchase are: (1) the unexpired term of the lease / leases and (2) house prices.
The shorter the unexpired term of the lease, the more the lease extension / freehold purchase will cost because the freeholder's 'reversion' comes sooner and this makes it more valuable.
Higher house prices also make lease extensions / freehold purchases cost more.
In September 2018 the Law Commission published a consultation paper with a series of proposed reforms concerning lease extensions and enfranchisement (buying the freehold). The period of consultation finished at the beginning of 2019 and the ‘Report on options to reduce the price payable’ was published on 9th January 2020. A copy of the summary report can be viewed at: https://www.gilmartinley.co.uk/documents/lcr9jan20.pdf.
In the consultation paper, the authors set out various options for ways to make lease extensions and enfranchisement cheaper / easier for leaseholders but the Terms of Reference for the report did not include making recommendations as to which option(s) should be pursued.
As result of this, it is possible that at some point the law will be changed such that the cost of enfranchising or extending a lease is significantly reduced, even if it would involve depriving the freeholder of its property for insufficient compensation, in valuation terms. This would amount to reallocation of wealth from freeholders to leaseholders.
On 7th January 2021 the Government announced that it planned to make lease extensions cheaper but the announcement (which can be viewed at https://www.gilmartinley.co.uk/documents/RJ7Jan21.pdf) was lacking in relevant detail or the anticipated timetable for legal reform. It is therefore possible that lease extensions in the future may cost less. If we are instructed to provide valuation advice in respect of a lease extension it would be on the basis of the current law.
Call us to see how we can help get you agree a fair deal and make the process as smooth as possible.
