Q&A - Lease Extension

ANSWER

The situation this flat owner finds themselves in highlights some of the dangers of accepting a freeholder’s informal offer. When informal offers are made, the main focus is usually on the premium offered and the ground rent. Flat owners who do not use the statutory route to extend their lease are not protected by legislation regarding changes to the term of their lease which can be altered by the freeholder and as the flat owner has no legal right for this informal offer it is largely a ‘take it or leave it’ deal.

Leasehold Solutions approach informal offers from freeholders in a very cautious manner and we don’t just focus on the cost that is offered. This has become especially important since the Mortgage Market Review came into force on 14 April this year, mortgage lenders are starting to take an interest in the terms of the lease when deciding to lend. A flat owner who accepts an informal lease extension because it seemed cheap and convenient can often find themselves in a similar situation to this flat owner.

Louie Burns, Managing Director, Leasehold Solutions