Long leaseholders who have been the registered owner of their flat for at least two years may have an individual right to extend their lease. You may make a claim for a new lease at any time but if your lease has less than 90 years to run we would advise you to exercise your statutory right to extend your lease.
Under the Leasehold Reform Housing and Urban Development Act 1993 long leaseholders have a right to extend their leases by adding 90 years to the original term. The right is for a new lease to be granted at a peppercorn ground rent which will mean that ground rent will cease to be payable to the freeholder.
Leases were commonly granted for a period of 99 years in the 1970′s and 80′s. These lease terms have now reduced to a point where they need to be extended in order to make the property more marketable to prospective purchasers.
Exercising your right to extend your lease will mean that a new lease is granted to you. The new lease will contain largely the same provisions as the old lease but the term will be extended and the ground rent reduced. An example of lease being extended under the legislation is shown below:-
Lease granted for 99 years from 25 September 1980 reserving ground rent of £50 per annum doubling every 25 years. As at January 2008, this would leave approximately 71 years remaining on the lease.
Exercising your statutory right for an extension of the lease will require your landlord to grant a new lease for a term of 90 years in addition to the original term giving a new lease with a term of 189 years from 1980 at a peppercorn ground rent. As at January 2008, this would leave approximately 161 years remaining on the lease.
If your lease is extended before the remaining term drops below 80 years there will be no marriage value payable to your freeholder and as such it will be cheaper to extend your lease. We would advise you to extend your lease sooner rather than later as failure to do so may result in significant financial consequences.