Is it possible to purchase a flat and extend the lease at the same time? I want to buy a flat but have been informed that the lease is very short.
Yes, it is possible to do that! There are different ways of potentially achieving this. Each has different commercial risks attached that you need to consider and potentially negotiate in respect of first. Hopefully, one of them works for you. If your seller qualifies to claim an extended lease, then contractual arrangements can be put in place for you to either complete your purchase from them once they have extended the lease. Or you can receive the benefit of this right, which is seen through after completion. The former means having a very long gap between exchange and completion, which either you or the seller might not be able to accept, for example where one of you has a related transaction that needs to be tied-in timing wise. The latter would not be an option for you if you are buying with a mortgage and the current lease term does not meet the lender’s requirements.
Alternatively, the seller’s landlord may be open to negotiating terms with them for a new lease to be granted to you on completion outside the statutory scheme. This is likely to be quicker but more expensive as regards the premium payable. This may be the only realistic option if the statutory claim route above doesn’t work. If your only workable option is to have the seller commence the statutory process for you to see through after completion, you will need to agree whether you or the seller bears the risk as to the premium ultimately payable and the associated costs. Some negotiation is needed to even reach the stage of being able to have the risk conversation. You will want to engage a specialist enfranchisement valuer to advise you of the premium payable for a new lease in this regard and you will want the seller to bear that cost, at least initially, in case you cannot agree terms for the purchase with them. So this is a key first step! In short each potential course has pros and cons that need to be thought through at the outset if you are to avoid delay and potentially significant wasted costs. Once the terms have been negotiated with the seller (and potentially the landlord) this needs to be carefully documented as part of the conveyancing process so that all eventualities are covered and you receive the benefit of a valid claim. Otherwise, you would have to wait for 2 years from the point you are registered as the owner before you could make a fresh claim by which time the premium may be significantly greater.
Mark Vinall is a partner at Winckworth Sherwood