Essentially, if you proceed to extend your lease, you need to have owned your flat for at least 2 years, which you have. It involves a court application to obtain an Order from the court that you have a new lease granted under the terms of the legislation i.e. 90 year extension with zero ground rent.

However, most people in your situation opt for buying the freehold instead, which has the following advantages:

You pay no “marriage value”, which could save you potentially thousands of pounds. With a lease extension, if your lease has less than 80 years left, you do pay “Marriage Value”.
You share the total professional costs, whereas with a single lease extension, you pay 100% of the total costs.
You then have the opportunity to extend your own leases to 999 years, with zero ground rent and also the ability to modernise your lease if and where necessary.
You avoid a future buyer pulling out of the purchase of your flat on the basis there is a missing freeholder, because the freeholder will be you, collectively.
Selling your flat “with share of freehold” will increase the marketability when you come to sell your flat.
With the freehold, you never have to worry about extending the lease again or being concerned about the reducing term of the lease. Your investment is therefore better protected.

Of course, to proceed with buying the freehold, you need to fulfill the qualifying criteria, of which the main one is to have at least 50% of all flats participating. Also, where there are just two flats in the building, BOTH flats must proceed together.

Tom

IMPORTANT NOTE: MY COMMENTS ABOVE ARE SIMPLY THAT – COMMENTS. THEY ARE NOT TO BE TAKEN AS LEGAL ADVICE, WHICH CAN ONLY BE GIVEN TO FEE-PAYING CLIENTS.

The issue here, is the fact that in two years time, the lease will have less than 80 years remaining, and this means you would pay significantly more for a new lease than you would if the lease had more than 80 years remaining. This additional factor is known as “Marriage value”. You may ask why you cannot just buy the flat now and then extend if afterwards. The difficulty here, is that you need to have owned the flat for 2 years before you can serve a formal notice on the freeholder, requesting an extended lease. By the time two years has passed (from when your name has been registered at the land registry, not completion itself), your lease will have less than 80 years remaining.

You can of course negotiate with your freeholder outside of the legislation, but your freeholder is likely to demand a higher premium, knowing this route is your only option for two years. Or your freeholder may simply refuse to offer a new lease and wait until the term reduces to below 80 years.

I would suggest you ask your seller, if you haven’t asked already, if they have enquired of the landlord whether the lease can be extended. The ideal scenario would be that your seller arranges and pays for the new lease before completion. However, it can be expected that your seller will refuse and simply state that the flat has been discounted to reflect the cost of a lease extension.

We can get around the two-year rule, to enable you to seek a new lease by way of a formal notice. In other words, I can prepare the appropriate documentation to enable you to make a formal claim for a new lease as soon as you have purchased your flat.

For more information on the procedure and any other aspect of your purchase, please feel free to email or call me using the details below.

Best of luck!

Tom Merralls
TJM Law

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.

I ACT FOR BOTH FREEHOLDERS AND LEASEHOLDERS AND IF ANYONE READING THIS POST REQUIRES FREE INITIAL LEGAL ADVICE, PLEASE DO NOT HESITATE TO CONTACT US USING THE “GET IN TOUCH” PAGE ON OUR SITE.

The fact is, your freeholder must sell (however difficult he is), provided both you and the other flat owner proceed together. You are correct by stating the general terminology is Leasehold Enfranchisement. I prefer to refer to it as Freehold Purchase or Acquisition of Freehold instead. Most people associate the word “Enfranchisment” with a Business chain of! I prefer to use simple language that people can understand.

I believe now is the best time to buy the freehold. Yes, it may take several months to complete, but once you have bought the freehold, you then rid yourself of your freeholder, reduce your ground rent to zero and you can then extend your leases to 999 years. All in time for when the property market gathers full pace once again i.e. when you may be thinking of selling.

I will be happy to assist you, and please let me have your details via our Get In Touch page. I will then provide you with a quote, together with an Information Sheet and some other useful documentation that will assist in your decision. In the meantime, you may wish to take a look at the Freehold Purchase Information Videos recently added to our site.

Your neighbour is wrong. I can see why they are pressuring you to join in with acquiring the freehold, as they wish to then go on to extend their own lease to perhaps 999 years (which you can do once you own the freehold title). However, they still have the option to extend their own lease without needing to involve you.

Another option for them is to buy the freehold title by agreement with the freeholder. If they can reach an agreement on price, they can proceed to buy the freehold without you, albeit the freeholder would have needed to initially serve a notice on both of you first (right of first refusal). After expiry of the notices, the freeholder can sell to whoever it likes i.e. your neighbour alone.

So, in summary, your neighbour cannot force you to do anything, and what they have said about having more rooms entitling them to more rights is, frankly, rubbish. You can continue as you are and not be involved with the freehold purchase at all. You can simply ignore anything your neighbour says and continue with your sale.

TJM Law offer a high quality conveyancing service, so please feel free to ask for a quote via my website.

Many thanks

Tom

IMPORTANT NOTE: MY COMMENTS ABOVE ARE SIMPLY THAT – COMMENTS. THEY ARE NOT TO BE TAKEN AS LEGAL ADVICE, WHICH CAN ONLY BE GIVEN TO FEE-PAYING CLIENTS.

Can I just clarify then, that my freeholder would have to notify me first if they intended selling the freehold on? And if I did not give my permission, they cannot sell? They are a well known large London freeholder with a notoriously bad reputation ( though Ive had no issue to date with them), so I worry a little about that. Im assuming the freeholder will want to hang on to ensure a large sum of money for extension of the lease as it is so short on my neighbours flat now. I also understood, if there was no long lease left on my neighbours property, they would not have the right to purchase?

Thanks again, Tom.