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Lease Extension or Freehold Purchase? An Introduction PDF Print E-mail

Under legislation introduced in 1993 (the Leasehold Reform Housing and Development Act 1993) subsequently amended, leaseholders can now qualify for the right to extend their lease individually.

Alternatively they can collectively qualify to purchase the freehold of a converted house or a purpose built block of flats – rights can extend as far as the purchase of an estate.  The right exists in both cases whether the freeholder is in agreement or not.

 

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Why buy a Lease Extension? PDF Print E-mail

Why buy a lease extension?Unlike participating in the purchase of a freehold there tend to be only two reasons to purchase a lease extension. The first is to preserve or increase the value of the property (more commonly a flat).  If the unexpired term of the lease has fallen below 80 years the cost of the lease extension will be proportionally greater but perversely there is a built in profit to be made by an individual extending a lease as only 50% of the “marriage value” is payable.

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Why buy the Freehold? PDF Print E-mail

Final negotiations meetingIt is not unusual for a freeholder to be “absent”.  Here the fabric of the building is often allowed to deteriorate and problems arise with organising maintenance and building insurance. In these circumstances there is no option but to buy the freehold.

Other reasons tend to include a need to control the building being acquired and include a lack of general maintenance, unfair/unreasonable service charges or theft/misappropriation of service charge monies.

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