18 Jan 2019
Angry older couple arguing with each other against hand drawn city plan

Are you considering building works that fall within the scope of the Party Wall Act 1996? Or have you received a Party Wall Notice to inform you of proposed works that may be affecting your property? Unsure about what to do next?

As experienced party wall surveyors, Foundation Surveyors should be your first port of call to discuss your particular situation. You can reach us by phone on 020 8133 9517 or by email at info@foundationsurveyors.com.

In the meantime, here are 5 frequently asked questions regarding party walls and procedures that may be helpful to you. (more…)

26 Nov 2018
Close up view of stacked coins and a model house - savings concept

Our last post discussed how Leaseholders can apply for an extension of their lease, under the Leasehold Reform, Housing and Urban Development Act 1993. Unfortunately, this only applies to eligible Leaseholders (which we also covered in our last blog).

To recap, a qualifying Leaseholder needs to:

  • Own a long lease (originally granted for 21 years or longer)
  • Have owned the property for at least two years
  • Not be in possession of a commercial or business lease
  • Not be leasing from a charitable housing trust

This second aspect – needing to have owned the property for at least two years – can often be a problem, particularly if the lease term is approaching the significant milestone of having just 80 years remaining.

If a Leaseholder has been in the property for less than two years, it does not automatically mean they cannot get an extension on their lease, only that it is up to the discretion of the Freeholder to grant it.

Contacting your Freeholder outside of the lease: What you should know

  • Consult with a professional surveyor for a lease extension valuation so you know what a fair offer would be (try our lease extension calculator for an estimate).
  • Just because your Freeholder has made you an offer does not mean you are obliged to accept it.
  • Keep all communications in writing.
  • Be aware of each term of the agreement – such as ground rent increases – not just the compensation figure.

What are the drawbacks of arranging a lease extension in this way?

Without the provisions of the Act, Leaseholders are in a more vulnerable position where Freeholders can demand much higher compensation or less favourable terms in exchange for a lease extension. For example, maintaining (or increasing) ground rent and only extending the terms to as low as 99 years.

However, if you can agree on a price close to your surveyor’s valuation, the benefit of this informal process is that it can be completed in a number of weeks instead of months.

If you are considering an informal lease, our team at Foundation Surveyors would be happy to provide a valuation before you get started and offer a professional second opinion before you accept the terms of an extension. Ultimately, the decision about whether to proceed is down to you, but understanding your best options financially can be an extremely useful tool.

19 Nov 2018
Two modern apartment houses

A majority of buyers do not understand the implications of lease length when they are choosing to purchase a property. As long as their mortgage lender is happy to proceed with the purchase, it’s common for new owners to simply move in and forget about the remaining term.

It’s when the time comes for them to sell their home that the implications of a short lease become apparent. To estate agents, solicitors and buyers’ mortgage lenders, a lease term that is approaching 80 years (or has already fallen below that threshold) is cause for concern; greatly impacting the value of the property.

Fortunately, the Leasehold Reform, Housing and Urban Development Act 1993 gives all eligible Leaseholders (also known as tenants) the right to extend their lease by 90 years and reduce their annual ground rent to a “peppercorn” (zero).

If you own a leasehold property, here are our tips for ensuring the lease extension process is as smooth as possible.

1 – Check your eligibility

To be a qualifying Leaseholder, you must have owned the leasehold for a minimum of 2 years. The original lease must also have been a ‘long lease’ that granted residence for at least 21 years (or with clauses that provide similarly long-term ownership). There are further restrictions in place for charitable housing trusts and business or commercial leases.

2 – Calculate your cost

Leasehold extensions involve several parts and typically cost thousands of pounds. You can try our leasehold extension calculator to get an idea of your investment or speak to one of our experienced surveyors for a more accurate estimate. In any situation, the final premium will need to be negotiated with the Freeholder.

3 – Understand your lease

You can save yourself a lot of money, time and stress if you understand the implications of your lease length before you exchange contracts. By speaking to a specialist about how soon you might need to extend, or whether you need to budget for a lease extension as soon as possible, you can make a more informed decision about your purchase.

4 – Apply early

Even beyond the 2-year period of ownership before you apply for a lease extension, many homeowners are not in a hurry to extend their lease. It’s important to know that the cost of a lease extension increases significantly once the term drops below 80 years, and the process can take between 3 and 6 months to complete.

5 – Transfer title

If you are planning to sell your home before a lease extension completes, you can begin the process and make your buyers the beneficiary. This allows them to continue the process once they move in without having to wait 2 years – although the costs of doing this will usually mean they make a lower offer.

For more information about the formal leasehold extension process, or for professional assistance in negotiating with your Freeholder, please get in touch. Our team has extensive experience in leasehold property across London and would be happy to help.

10 Aug 2018
Couple Buying a New Home

In our last post, we looked at some the pitfalls of buying a leasehold property and why it’s so important to check the terms of your lease. The fact is, finding a property that offers a share of freehold can be tricky, limiting your search criteria in a market that’s already challenging to navigate. Writing off all leasehold homes isn’t always possible, so it’s essential that you know what to look for to find a good deal.

Here are our top tips for buying a leasehold property and making a good investment.

1 – Lease length

The remaining term on the lease is going to have a big impact on the value of the property, both when you purchase it and when it comes to put it back on the market. Although it’s possible to extend the lease once you have lived in the property for two years, the price of doing this increases considerably once the number of years left drops below 80 (consequently dragging the value of the property down with it). Ideally, look for leases that have at least 90-95 years left, although anything about 85 is fine as long as you are happy with extending the lease.

2 – Asking the current owners to extend the lease

If you aren’t happy about the lease length, you can ask the current owners to extend it before you agree to purchase the property. If they get the process started, they can name you as the beneficiary once you move in. This may be a requirement from your lender.

3 – Ground rent

Make sure you check what the annual ground rent will be so you can factor it into your budget. Leases with a flat rate of £300 a year or less are generally nothing to worry about, but if there is any confusing wording about price reviews or rent increases, you might want to steer clear.

4 – Buying the freehold/Collective enfranchisement

Collective enfranchisement is where at least 50% of the apartment owners in a block agree to buy out the freeholder. Just like extending the lease, there is a premium associated with this but it may be worth finding out if the existing tenants have shown any interest in this before you move in. Talk to us for more information about collective enfranchisement – it’s certainly worth considering.

Contact us

If you’re interested in a leasehold property but need more information about lease extensions or collective enfranchisement, please feel free to give us a call. Our RICS-certified surveyors are highly trained to deliver professional, tailored advice for both residential and commercial property, so whether you are the freeholder of a block of flats or a leaseholder looking for advice, we can help.

03 Aug 2018
Classic Victorian houses in London

You won’t have to look for a flat in London for long before you realise that leasehold, not freehold, is the norm. Some buyers might not look twice at this important detail, but it can soon land you in hot water if you’re not sure what you’re dealing with. Here are the most important things to know about buying leasehold.

What is the difference between leasehold and freehold?

The freeholder of a property owns the ground beneath the building, while a leaseholder only has an agreement to rent the land. As a freeholder – even if it’s just a ‘share of freehold’ rather than sole ownership – you have the right to live on that plot of land without paying ground rent. You also have control over the maintenance of the roof and external walls.

With a leasehold ownership, the ground below the property is still owned by a freeholder – it’s just not you. You’ll be subject to the terms of a lease, which may include ground rent charges, obtaining permission for major works and other restrictions.

What are the main concerns with a lease?

As outlined above, there are many potential pitfalls when buying a leasehold property, which is why it’s so important to check the terms before you commit to buying.

The main issue to be aware of is that, should the lease be allowed to reduce to zero, ownership of the property will revert back to the freeholder, leaving you nothing to show for it. Although you can apply for a lease extension, it will cost several thousand pounds – escalating sharply as the remaining term reduces. Use our lease extension calculator for an idea of costs.

Average annual ground rent around the UK is only £100-£300. However, there is no restriction to what the freeholder can charge and you may find that it is much, much higher for the property you are interested in. Plus, the lease may include stipulations that the ground rent will increase after a set number of years, so even if the cost looks reasonable now, by 2050 it could have multiplied to a sum that renders the property unsellable.

Why would anyone buy leasehold?

It’s not all bad news. Some lease terms are very lenient, ground rent can be non-existent and the duration of the lease can be anywhere up to 999 years. Even short leases can be extended by 90 years, so shouldn’t necessarily be a deal-breaker. The important thing is to know what you’re getting into before you exchange contracts to purchase the property.

If you have any questions about lease extensions or owning leasehold property, our team of expert surveyors will be happy to help. Email your query using our contact page or call us directly on 020 8133 9517 for assistance.