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Opportunity knocks for leaseholders

9th February 2021

Opportunity knocks for leaseholders

Jen Hicks-Jones, an Associate in the Property team, and Peter Humpherson, an Associate in the Property Litigation team at Higgs & Sons, take a close look at radical housing reforms which will provide a welcome tonic for residential leaseholders.

Some of the most dramatic changes to English property law for several decades have recently been announced.

One of the more eye-catching changes will see leaseholders being given a new right to extend their lease by 990 years.

This could benefit well over four million leaseholders who own their flat – but not the land it sits on.

As it stands today under the Leasehold Reform, Housing And Urban Development Act 1993 (LRHUDA), residential tenants with long leases of more than 21 years have the right to seek a new lease of their flat.

As part of the qualifying criteria, the tenant must have been the registered owner of the existing long lease for at least two years prior to the date of claim.

While the extension would be made at a zero ‘peppercorn’ rent, there is a 90-year limit to the lease and a premium is payable for the lease extension calculated by a formula stipulated in the LRHUDA.

The recent changes announced by Housing Secretary Robert Jenrick provide a real opportunity for millions of leaseholders.

Flat leaseholders are expected to soon be able to extend their leases by a new 990-year period, and that same right will be extended to house leaseholders.

The leaseholder’s hand is further strengthened by new regulations insisting that the freeholder will not be paid any ground rent under the new regulations.

Additionally, some of the higher costs of the premium payable for extending the lease – including the so called ‘marriage value’ which is the difference in value of the property following the completion of the lease extension – are being abolished and replaced by a fairer, cheaper and more transparent process.

It remains to be seen when the new changes will be introduced but it is clear this is a significant boost for residential leaseholders across the UK.

Securing specialist legal advice will be crucial in ensuring an individual maximises the full benefit of the lease extension opportunities.

If you could be affected by these lease extensions changes and are seeking further advice, please contact our experts Jen Hicks-Jones (Jennifer.hicks-jones@higgsandsons.co.uk and 01384 327183) and Peter Humpherson (peter.humpherson@higgsandsons.co.uk and 01384 327126).

 

 

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