A recent article from the Newcastle Chronicle highlights the importance of obtaining advice when it comes to purchasing a leasehold property.
In this case homeowners in the affected streets need to extend their leases. Many mortgage lenders will refuse to advance money to borrowers where the property being purchased has a remaining lease of 60 years or less. As a result homeowners can find that their valuable home is almost impossible to sell. The law helps by giving the right to homeowners to seek a lease extension from the freeholder and in some cases freeholders can be compelled to sell the freehold of a house. In this case sadly the charity owning the freehold is relying upon a legal loophole and is refusing to extend the leases. They say they cannot extend the leases because as a charity it owes a responsibility to its beneficiaries rather than the homeowners.
Most leaseholders have a legal right under the Leasehold Reform Act 1967 to buy the freehold of their house if they meet certain qualifying criteria. Alternatively, it is possible to negotiate with the freeholder informally to buy the freehold by agreement. Leaseholders can approach the freeholder to try and acquire the freehold of their house and agree terms. Alternatively they can use a formal procedure to acquire the freehold. Under this procedure if the price cannot be agreed, an independent tribunal can fix the price and legal terms should you fail to reach an agreement.
Alternatively it may be cheaper to extend the lease. Under the Leasehold Reform Act 1967 you may be entitled to an extension of 50 years. There is no price payable for a lease extension of a house granted under the Act, however, at the start of the new 50 year lease the ground rent may increase to a much higher “modern rent”. The procedure is complicated and there are various conditions which must be met. It is therefore important to understand the implications of purchasing a leasehold property and any possible issues that may arise in the future.
There are significant costs and pitfalls in seeking to exercise statutory rights. We strongly advise that you seek professional legal advice before purchasing a leasehold property or seek to enforce your legal rights. At David Gray solicitors we have experience of these matters and can provide assistance throughout the process.
Call our Property team on 0191 232 9547 or browse our Property pages