Poss changes to lease extension law - am I missing something?

Jennifer83

Will try to keep this brief! Apologies if it has been answered before - have been reading various forum posts and articles and still a bit confused.

I own (with mortgage) a leasehold ex local-authority flat. The council is the freeholder. There are 88 years left on the lease (expires June 2112). I started looking into extending the lease a couple of years ago but becase of the planned changes with the Leasehold and Freehold Reform Bill, I understood it was worth holding off.

Still seems unclear if/when this legislation will pass and how long it will take for actual chages to take effect.

But I'm now not sure if change in law would make any positive difference to me anyway. My ground rent is 'peppercorn' £10 a year. From what I've read (eg here https://homehold.org/standard-article/leasehold-reform/) the main benefits of the new law would be

- reducing ground rent: wouldn't apply to me
- reducing costs if your lease is less than 80 years: I would plan not to let my lease go below 80 years, unless the intention is to massively reduce the cost to less than what it would be for a lease at 88 years currently?? I don't have particular plans to sell but there are general life unknowns and it's possible I would in say 2 or 3 years.

- change in deferrment rate: sounds like (I think!) this could just easily go down as up, meaning I could pay significantly more if I waited.

So seems to me I should just extend the lease now (and should have done it when I had 90 years rather than waiting). Just wanted to check I'm not missing something or misunderstanding. Any advice much appreciated. Thank you

AskAsk

we have an ex-local flat like you and started to do the lease extension last year but was advised by our solicitor that we would lose out on a term called "qualifying lease".  she says that the building safety act 2022, which applies to buildings of 5 storey or more, means that flats in these blocks are protected from costs of making a building safe, like the cladding issue and fire safety issue, but it does not cover extended leases.  however, this is being reviewed as part of the lease reform so we should wait.

therefore it will be best for you to wait.

Jennifer83

AskAsk said:

we have an ex-local flat like you and started to do the lease extension last year but was advised by our solicitor that we would lose out on a term called "qualifying lease".  she says that the building safety act 2022, which applies to buildings of 5 storey or more, means that flats in these blocks are protected from costs of making a building safe, like the cladding issue and fire safety issue, but it does not cover extended leases.  however, this is being reviewed as part of the lease reform so we should wait.

therefore it will be best for you to wait.

Ah ok. Thank you, hadn't realised that. I don't have cladding (flat was built 1959) but I guess there are still fire safety things. Will explore this angle! Thank you.

AskAsk

Jennifer83 said:

AskAsk said:

we have an ex-local flat like you and started to do the lease extension last year but was advised by our solicitor that we would lose out on a term called "qualifying lease".  she says that the building safety act 2022, which applies to buildings of 5 storey or more, means that flats in these blocks are protected from costs of making a building safe, like the cladding issue and fire safety issue, but it does not cover extended leases.  however, this is being reviewed as part of the lease reform so we should wait.

therefore it will be best for you to wait.

Ah ok. Thank you, hadn't realised that. I don't have cladding (flat was built 1959) but I guess there are still fire safety things. Will explore this angle! Thank you.

we instructed a specialist solicitor for lease extension as we were advised to do this before we were told by the EA that we didn't need a solicitor and could have done the extension through the council directly, but it was fortunate that we did as we wouldn't have known about the issue otherwise.

we had paid for the survey, a specialist surveyor needs to be instructed, and paid £1,000 up front to the solicitor, before she said something had come to her attention and so we had to put the extension on hold.  she said we could ask the council to agree to put in a clause in the new lease that we would be protected but the council refused to do this.

we don't have cladding either but you could pay for a water sprinkler system to be installed and other safety measures that are required.

Jennifer83

AskAsk said:

Jennifer83 said:

AskAsk said:

we have an ex-local flat like you and started to do the lease extension last year but was advised by our solicitor that we would lose out on a term called "qualifying lease".  she says that the building safety act 2022, which applies to buildings of 5 storey or more, means that flats in these blocks are protected from costs of making a building safe, like the cladding issue and fire safety issue, but it does not cover extended leases.  however, this is being reviewed as part of the lease reform so we should wait.

therefore it will be best for you to wait.

Ah ok. Thank you, hadn't realised that. I don't have cladding (flat was built 1959) but I guess there are still fire safety things. Will explore this angle! Thank you.

we instructed a specialist solicitor for lease extension as we were advised to do this before we were told by the EA that we didn't need a solicitor and could have done the extension through the council directly, but it was fortunate that we did as we wouldn't have known about the issue otherwise.

we had paid for the survey, a specialist surveyor needs to be instructed, and paid £1,000 up front to the solicitor, before she said something had come to her attention and so we had to put the extension on hold.  she said we could ask the council to agree to put in a clause in the new lease that we would be protected but the council refused to do this.

we don't have cladding either but you could pay for a water sprinkler system to be installed and other safety measures that are required.

I see. That's teally helpful - thank you. I need to find out what the council are planning with my block then!

NameUnavailable

Peppercorn ground rent means a peppercorn. Your ground rent is £10.

If you extend the lease via the statutory route your ground rent will become peppercorn. The potential benefit in waiting to see what the new legislation is, will be a longer lease extension and lower cost. But nothing is certain yet. I'd wait a little longer, if nothing happens before the next election I'd probably pull the trigger then.

The usual advise is not to do any informal extension directly with the freeholder (although I would hope that a council wouldn't try to stitch you up as some freeholders do!).