Nov/Dec 2021

40
South Woodford Village Gazette
FLAT-OUT ADVICE
Geoffrey Williams from local solicitors Wiseman Lee talks about lease
extensions and explains why a government proposal that would
reduce the cost of extending shorter leases may not come to fruition
If you own a flat or are thinking of buying
one, you must check how many years
are left on your lease. Why? Because as
the remaining term – the number of years
left to run – shortens, the value of the flat
will fall.
© 2021 Google
If the remaining term is about 125 years, this
isn’t too serious. If it’s around 90 years, you
should do something about it.
Fortunately, if you have owned the flat for
two years, you have a legal right to extend
the term by 90 years, but you have to pay
compensation to the landlord. How much you
have to pay depends mainly on the value of
the flat and the remaining term, so the shorter
the remaining term, the more you will have
to pay.
You would need to get a surveyor to advise
how much you may have to pay. Don’t forget,
if you do claim a lease extension, you will
have to pay most of your landlord’s costs as
well as your own. You can get a rough idea of
how much you may have to pay by visiting
the Leasehold Advisory Service website
(lease-advice.org), where you will find a
premium calculator.
There is an unpleasant surprise in store if
your remaining term is less than 80 years.
The amount to pay suddenly increases. This
is because you then have to pay something
called marriage value. There is a hidden value
in the flat that neither the landlord nor the
tenant can individually access. It can only
be unlocked by uniting – marrying – the
landlord’s and the tenant’s interests in the flat.
Extending your lease does just that.
The rule is the landlord gets none of the
marriage value if the remaining term is more
than 80 years when the tenant makes the
claim. If there are less than 80 years left, the
landlord gets half of the marriage value.
The government announced last January
that they intend to abolish completely the
marriage value element of the compensation
paid to the landlord. If this happens, there will
be a big reduction in the amount tenants have
to pay to extend shorter leases.
If you have a shorter lease, you may think
you will be better off waiting until the law
changes. You might be wrong, though. There
is no timetable yet for changing the law.
Also, the change may well be challenged by
big freeholders, as it will slash the value of
their property, so the law change may never
happen. If it doesn’t and you delay extending
your lease, the amount you will have to pay is
almost certain to go up.
Wiseman Lee is located at 9–13 Cambridge
Park, Wanstead, E11 2PU. For more
information, call 020 8215 1000
To advertise, call 020 8819 0595 or visit swvg.co.uk