Anyone purchasing a lease with 81 years unexpired should seriously think about getting the seller to extend it.
There is a statutory right to require the landlord to grant a lease extension of 90 years.
1. So why is it so important to think about extending the lease when there are still 81 years left remaining?
- Generally the shorter the lease the more expensive it is to extend;
- And leases which have 80 years or less become even more expensive to extend due to the additional premium that will be payable to the Landlord.
2. So why is it important for the Seller to extend the lease and not you?
- Under the statutory procedures, in order to qualify for a lease extension, the party making the application will need to have owned the property for at least two years. Therefore, as a buyer, you cannot apply for a lease extension until two years after your purchase.
- It is therefore common practice for a buyer to require the seller to initiate the procedure, assuming that they have owned the property for two years.
3. Which party will have control of the application to extend the Lease?
- It is usual for the buyer’s solicitor to draft the notice and the seller to serve the notice on the landlord requesting the lease extension prior to completion of the sale.
- The seller will then assign the benefit of the notice to the buyer on completion and the buyer is then permitted to pursue the application, despite having only just acquired the property.
- The reason the buyer’s solicitors will want to draft the notice is because any failure to comply with certain specific requirements set out in the statute will result in the notice being invalid.
- Where an invalid notice is served, no further application can be made for the period of one year.
- And once completion of the sale has taken place, the buyer will have to wait until they have owned the property for two years before they can apply again.
In conclusion, if you are buying a flat where there are between 80 and 82 years remaining, ask your solicitor about acquiring a statutory lease extension.