We acted for a client who was selling a private flat. Only when a sale had been agreed and we were instructed, did she realise that the lease had only 60 years to run and was not acceptable as security to the buyer’s lender, and therefore not acceptable to any buyer, without the lease being extended.
There is a statutory procedure for extending the lease by 90 years. There is a strict timetable and whilst most people would be advised to contact their landlord to agree the extension, in this case the landlord was a company that had been dissolved several years before, and therefore could not grant the extension.
We had to apply to the county court for an order that the landlord’s interest vested in the court, and then to the first tier tribunal for an order that the client was entitled to a new lease and the premium she would need to pay for that. Once that was decided, the premium, less her costs of making the court application, was paid into court and the court executed the new lease.
With an increasing number of older flats there will be more extensions required. The premium increases once the length left on the lease is less than 79 years 364 days. An expert surveyor is required to calculate the premium.