Pro and cons of Lease Extension

Lease Extension –  the Pros:

As an alternative to a lease enfranchisement and exercising the right to manage, tenants also have the right to demand that their freeholder sell them a 90 year leasehold extension at a fair market price in accordance with statutory guidelines. Although buying a lease extension does not deliver to the tenant ownership and control of the building it is a much simpler process than leasehold enfranchisement [also known as collective enfranchisement or freehold purchase ], as it is an individual right, and thus often quicker and simpler for a tenant to pursue. The tenant will not have to cooperate with neighbours and can protect a diminishing lease without taking on the obligation of managing the building. The financial cost of buying a 90 year lease extension within the 1993 Act is usually similar to the cost of the tenant’s share of the freehold of the building although this is not always the case.

Lease Extension – the Cons:

A tenant may find however that they pay slightly more in legal and surveyor’s fees because a single extended lease cannot offer the economies of scale that a large collective claim can where there are numerous tenants sharing these costs.

Generally speaking a tenant will be a qualifying tenant and will be entitled to seek an extended lease if its original lease was granted for a term of more than 21 years and the tenant has owned the lease for two years. It is no longer necessary to reside in the flat to qualify. Again, it is strongly advisable to instruct a solicitor to implement the technical procedure and a surveyor to advise on the likely premium payable for the new Lease.

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