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Lease extensions

Lease extensions

What you need to know before you move flat

16/02/2017

Moving into a new flat is one of the biggest steps in a person’s life. This is especially true if you have been living with your parents or roommates most of your life. When you move flat, you finally get to enjoy the freedom you have always wanted. With freedom come responsibilities. Flats do not maintain themselves. They must be carefully tended for by the residents lest they become shoddy. You must also accurately know the rules of tenancy. The second biggest reason, other than rent default, which causes people to lose their tenancy deposits is a breach of tenancy agreement. You must thus know every clause that guides your tenancy.

Plan your finances

People move into new flats when they are confident that they will pay the rents. Financial misfortunes happen to everyone. The last thing you want to do is fail to pay your rent. Rent arrears can taunt you for months or even make you homeless. You have to organise your finances well. Never move into a new flat simply because you have an inkling of how to pay rent for the flat. You must be double sure of your abilities to cater for your new accommodation.

Check the accommodation according to your needs

The idea of moving into a new flat may seem exciting until you realise that the apartment does not match your personal standards. Houses in the UK have different fixtures and fittings. They are also of different sizes. Before moving into a flat, make sure that it has the things that you want. Make sure that it is large enough to accommodate you. Online conveyancing has made the virtual exchange of property ownership very easy. A negligent tenant can forget to inspect a flat with the belief that his solicitor will do all the work. A solicitor can only do so much. The solicitor will not know your heart’s desires especially if you do not express them to him in writing. It is the responsibility of a tenant to ensure that the new flat fits his personal needs.

Inspect the contents

The fact that a flat has everything does not necessarily mean that those things are working. A used flat may have several fittings that are out of order. Flat inspection has to be thorough. Try out windows, taps and switches to make sure that they are working. Never base your judgment on what you see on catalogues. Catalogues may have very attractive features but turn out to be hogwash. You must take an incentive to visit the flat and try everything.

Checkup all terms of Agreement

Besides faulty fittings, the other thing that can make your life miserable is the tenancy agreement. Tenancy agreements cover many items. They are usually drawn by landlords even before a tenant expresses interest in a flat. A careless tenant will take a fleeting glance on the agreement and append his signature. This is the worst mistakes you can ever make. If you sign an agreement and later claim that you did not know its contents, even the court will not listen to you. Make sure that you know all terms of tenancy. You must know who is responsible for repairs, whether you are allowed to have pets, or if you will have to pay your gas and electricity bills.

A breakdown of leasehold extension cost

09/01/2017

Leasehold extension enables a leaseholder to increase his duration of residence in a property. Leasehold extension requires payment of fees that range from the solicitor's fees to the actual cost of the extension. All these fees add up to a given total amount of leasehold extension cost. The cost can be broken down into solicitors fees, lease valuers fees, the cost of doing research and the premium for a lease extension. Each cost has a role to play in the whole extension process.

The first person, a leaseholder, must contact is a solicitor. Leaseholder’s solicitor plays a crucial role in making leasehold extension a success. Solicitors advise their clients on possible ways of extending leases and also help in researching and documenting lease extension. A contract can be negotiated informally or through a legal framework.

Informal Leasehold Extension

The informal lease extension is when a leaseholder and his landlord agree on terms of extension by themselves without involving the law. The landlord does not get a notice of lease extension. Statutory laws of lease extension such as the 90 year extension period, zero ground rent and others are not necessarily adhered to. Informal lease extension can be cheap at face value. However, unscrupulous freeholders tend to hide subtle clauses in the agreement that will turn out to be even more expensive to the leaseholder. This is why it is important to have a solicitor help you scrutinise the lease for any hidden detrimental clauses.

Formal Lease Extension

Formal lease extension follows statutory laws of extending contracts.The leaseholder has to send a notice of lease extension to the landlord. Every negotiation is carried out within the confines of the law. A landlord cannot reject duly served notice without proper grounds. Reasons for rejecting lease extension include breach of current contract by the leaseholder. Formal lease extensions are usually more expensive than informal ones because they require the involvement of many parties. A solicitor can help you estimate the cost of either method of conveyance. A leaseholder must pay conveyance fees to both his solicitor and his landlord’s solicitor.

Solicitor’s involvement

The solicitors assist in negotiating an agreement and filing documents. The solicitors act as mouthpieces of their clients. They also settle disputes in court on behalf of their client’s. The most common cause of conflict is the freeholder’s failure to respond to the notice of lease extension. Each solicitor’s fee is usually around £1,500.

The major cost of lease extension is the premium. For a lease extension, a leaseholder must pay a premium to the landlord. The premium is calculated based on the location of the house, the current ground rent and the duration of the new lease. A leasehold valuer can give an estimation of the premium. The value of the premium must be included in the notice served to the landlord. The landlord can accept the premium or ask for adjustments. Once a premium is agreed upon, the owner should get either 10% of the premium, or £250, whichever is greater. If the landlord rejects notice for a lease extension, the leasehold can apply for a hearing in a tribunal. The landlord pays expenses for a lawyer representing him in the tribunal.

The process of extending lease on flat

05/12/2016

Leaseholder has the right to seek an extension of his lease. This right is spelt out in The Leasehold Reform, Housing and Urban Development Act 1993. A landlord has very few grounds for denying lease extensions. Extension of the lease actually means getting a new lease. The terms of the new lease may be different once you are done extending the lease on flat. You may pay, more, live longer or generally have an entirely different arrangement with your freeholder.

Not any occupant of a flat can seek an extension of a lease. The Leasehold Reform, Housing and Urban Development Act 1993 clearly defines who a leaseholder who has the right to extend a lease is. First, the flat has to be a larger part of property. It must lie above or below another material part of the property. The property must be solely constructed to or adapted for human occupation and not any other activities. The occupant must have been registered as the leaseholder for at least two years. Failure to meet all these criteria negates any possibility for a lease extension.

Lease extension may be formal or informal. Either way, you have to notify the landlord before extending the lease. Informal extension involves paying no regard to the laws guiding lease extensions. The leaseholder makes an agreement with the tenant without notifying any other authority. This form of extension is subject to conflict since any one of the parties can breach the agreement. A violation of informal agreement cannot be easily resolved in court. Informal arrangements are only useful when the parties involved absolutely trust each other. Many people tend to avoid this kind of lease extension.

The proper and most preferable type of lease extension is the formal extension. Here, the leaseholder serves the freeholder with a notice for an extension. He can serve the notice anytime during the current fixed time. The extension notice notifies the freeholder that the leaseholder wants to extend the lease. The law provides that the freeholder must accept the leaseholder’s desire to prolong the lease.

The notice is served to the landlord, also known as the freeholder. Most leaseholders never communicate directly with their landlords. In this case, they can send the notice to the landlord’s agent, which can be a real estate agent or a Management Company. The notice sent to the landlord’s agent notifies them to send the leaseholder the contact information of the landlord. This is because, eventually, the landlord is the one to be served the notice for a lease extension. Alternatively, you can find out the owner’s contact information from the Land Registry.

The freeholder must send a counter-notice to the leaseholder within two months. The leaseholder is allowed to seek a court order if the landlord fails to respond within two months. The court order forces the landlord to enter into negotiation for fee extension with the leaseholder.

Buying a Property on Lease

22/03/2015

It often creates a dilemma regarding buying a property on lease. It involves the materiality associated with the time remaining with the lease and reaps the benefit from such transaction. Rules applied to buying property on lease are the laws involved in conveyance in UK. The transfer of ownership in UK involves the lease term around seventy years or above and this leaves the new owner somewhat carefree with the issue of ownership. There are still few points; the purchaser should keep in mind before making a conveyance happen. The points are:

  • You should never go and buy a property which allows you to have lease for any less than 1 year or so. This is because, at this moment, you might think of buying the property for no more than a year, but with the time passing by, the decision changes. This is what I have experienced in my career in this sector and therefore telling you to keep it in mind.
  • If you are doing the conveyance all by yourself, there are many loopholes that make it possible for the seller to hide information from you require knowing. These are the information that can put you at stake and lease is one of them.
  • Often the sellers camouflage the cost and sell it at a price higher than the regular based on the area it’s located in. The issue of lease thus gets hidden by the extra amount you pay.
  • Even in the case where you look forward to selling it off by the end of a year, you should still extend the terms of lease as well the time associated.
  • There are certainly few reasons why we discourage you to buy property with such short term of lease in. There can be times when you will find yourself with a necessity to sell of the property in possession and then comes the question of lease. The sales price will fall drastically if you fail to make sure the property last with a least of at least 60-70 years in future. This requires you to extend the period of lease ahead of time that too before buying the property.
  • In case where you look forward to remortgaging the property to a third party, you will not get the desired customer on that note where the lease is for a shorter period of time.
  • Whenever you find a quote of a house being sold at a price less than the other such available in the market, note that, it often happens with the ones with short time lease.
  • A statutory lease of 90 years is available and it’s recommended that you make the utmost use of the same. A property is not bought for a year or two and you want to make the utmost usage associated with the same. Therefore, apply for extension of the lease even if it looks sufficient for you.
  • Remember, a property with a lease of maximum period can be sold afterword at a price higher and it certainly increases the value of the property.
  • It’s recommended that you apply for the extension of the property before the lease hits a period of 80 years. Beyond that, it increases the complicacy associated with extension of lease and makes it difficult for individual to deal in.
  • There is a basic rule for the new owner of the property that, the one applying for extension of leases needs to hold the property for at least 2years. Therefore, it’s better if you ask the seller to get it done for you. Otherwise, he can provide you with a statutory notice regarding his approval on your getting the lease extended.