There is now a faster process for leaseholders to extend their lease or for collective enfranchisement, says law firm Adams & Remers, which will also help to speed up the sale process of leasehold properties.
The Leasehold Reform (Amendment) Act 2014 came into force on 14 May 2014, has removed the requirement for notices in England to be signed personally by the participating leaseholder(s) when extending their leases, or collectively enfranchising under the Leasehold Reform Housing and Urban Development Act 1993. Solicitors will be able to sign on tenants’ behalf consequently speeding up the process.
Joanna Clark, Solicitor at Adams and Remers, comments: “Leases are wasting assets and whether contemplating selling now or in several years time, it is important to bear in mind that potential buyers may be deterred and mortgage lenders can be reluctant to lend as the remaining duration of the lease decreases.”
Eligible tenants, who have owned a long lease, in excess of 21 years, for over two years, have the right to extend their lease for an additional 90 years on top of the remaining duration.
Joanna continues: “For those looking to sell, but are concerned about the length of their lease, they should bear in mind that starting an application will still add value to the property. Once a tenant’s notice has been served it will be assigned to the purchaser, meaning that the flat can be sold with the application and the purchaser will then be able to continue with the application without having to have owned the leasehold for over two years.”
Leaseholders also have the right to purchase the freehold title to the property from their landlord.
Joanna continues: “If several residents are looking to extend their lease duration, then collective enfranchisement can be very beneficial. Participating residents will have the power to grant longer leases as well as the ability to oversee the management of the property and buyers are increasingly attracted to becoming part of a tenant owned building.”
At least two-thirds of the flats must be let to tenants who hold a long lease, the building must have no more that 25% non-residential use, and no less than half the number of flats in the building must participate and where there are two flats, both tenants must participate. Those who do not wish to become directors in a tenant company and who do not want to take an active role in the management of communal facilities can become shareholders.
Joanna concludes: “In situations where there are several tenants participating, the new legislation allowing solicitors to sign the notice on their behalf will certainly make the collective enfranchisement process quicker and more efficient.”