Hi, We are the freeholder to a building containing 3 flats. We have had a request to extend a lease which started in 01 Jan 1987, hence it is over 21 yrs ago from start date. i.e. not qualifying as a long lease.
We are happy to extend the lease 125 yrs from today with Ground Rent as is and to continue to rise as per current lease for the new extension. We have received request for zero Ground Rent, however, this is not an option that is feasible to us. As I understand there is no right to zero Ground Rent in this case. Help is much appreciated.
Peppercorn Ground Rent
July 21, 2011 By 1 Comment
Hi,
I believe we have spoken since your post, but for the benefit of readers of this thread, I comment as follows; your reference to the 21-year period is in fact reference to the minimum term of lease that will qualify for a lease extension under the legislation. To put it another way, in order for a leaseholder to qualify for lease extension being granted under the legislation, their lease must have been ORIGINALLY granted for a term of 21 years or more. Consequently, almost all residential flat leases will satisy this criteria, as most were ORIGINALLY granted for 99 years or 125 years.
In addition to this, the leaseholder must have OWNED the flat for at least 2 years, in order to qualify.
If a leaseholder satisfies this criteria (lease originally granted for +21 years and also having owned flat for +2 years), they are entitled to serve a Lease Extension Notice upon you to request an extended term of 90 years on top of the term that remains and also for a peppercorn ground rent (i.e. zero).
You confirmed your leaseholder has owned their flat for +2 years. This means your leaseholder can serve a formal Lease Extension Notice upon you to extend their lease and have the ground rent reduced to a peppercorn.
Please note the above information applies to extending a lease under the legislation. This is only one way to achieve an extended lease. In my experience, most extended leases are negotiated outside of the legislation between the leaseholder and the freeholder. A formal Notice is usually only served when negotiations break down.
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