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Lease extensions

a key in a lock - Lease extensions, extending my lease, legal advice in Hungerford, Berkshire.

If you have owned a leasehold property for over 2 years as a private individual, generally you will have a right to extend your lease (subject to qualifying conditions). This may be required when you are thinking of selling your flat or re-mortgaging, or you may wish to do it as an investment in your property for the future.

The new lease would be for a period of 90 years plus the original term at a peppercorn rent.

You should look at extending your lease if it has less than 90 years to run, as it can begin to devalue the property as the lease term shortens. When the lease drops below 80 years, the premium can increase significantly. Most mortgage companies will not accept leases of less than 30 years plus the proposed mortgage term.

THE PROCEDURE

Qualification

Was the lease originally granted for a term of more than 21 years?

Have you held the lease for at least 2 years or had the benefit of the lease extention process assigned to you?

Valuation

A specialist valuer will prepare a valuation of the lease extension and give you a suggested premium, using a special formula set out in the legislation.

Notice of Claim

We will prepare a notice to inform the landlord of your intention to purchase a lease extension. This is served on the landlord and any other parties to the lease (e.g. a management company).

Landlord’s Counter-notice

The landlord has 2 months in which to serve a counter-notice, either accepting your proposed terms or proposing new terms, or denying your claim. During this time the landlord is likely to instruct its own valuation of the property and may require access for this. They may also ask for a 10% deposit from you.

Negotiations

Within 2 months of the date of the counter-notice, both parties have the opportunity to negotiate agreed terms.

First Tier Tribunal (Property Chamber)

If an agreement cannot be reached, an application must be made to the Property Tribunal for a determination of the premium payable.

Completion

Once terms are agreed, or have been determined by the Tribunal, the landlord’s solicitor will provide the new lease and this will be signed by all parties and completed. This is the point at which you must pay the premium and costs.

Costs

As part of the legislation, the tenant is responsible for paying the landlord’s legal fees for service of the counter notice and preparation of the new lease, and the landlord’s valuation fees. These must be reasonable and if they are not agreed, an application can be made to the Tribunal for a determination of the amount payable.

Download this resource as a pdf

To discuss this and to obtain more information contact:
Julian Dickins or Deborah Wason at Dickins Hopgood Chidley Solicitors,
The Old School House, 42 High Street, Hungerford, Berkshire, RG17 0NF 01488 683555

Buying your freehold

Signing a document, to illustrate someone buying their freehold, having received legal advice from property solicitors in Hungerford

If you live in a leasehold flat and fulfil the relevant qualifying criteria, it is possible to purchase the freehold of the building from the current freeholder.

This will give you several advantages, including:

1. Control over the management of the building, including insurance, maintenance, repair and decoration;

2. Control over the charges you pay for the management of the building;

3. It is likely to increase the value of your property.

Before you proceed with a freehold purchase, you will need to discuss the matter in depth with the leaseholders of the other flats in your building and obtain a commitment as to those who are going to participate. This can be done by a “participation agreement”.

FREEHOLD PURCHASE PROCEDURE

Qualification

Check that you qualify. Briefly, you will need the building to be self-contained, or to be a self-contained part of a building; any non-residential parts should be less than 25%; 2 or more flats must be held by qualifying tenants; flats of qualifying tenants must be at least 2/3rd of total flats; and participating tenants must be not less than 50% of total flats.
Valuation

It is strongly recommended that you seek a valuation and advice from a suitably qualified surveyor. They will give you a suggested purchase price and any other pertinent valuation information.
Forming a company and organising the Participants

If there are more than two flats involved it is best to form a freehold company. We can arrange this for you. You should also set up a fund so that all participants can contribute towards the costs.
Notice

A notice must be served on the current freeholder of your right to buy the freehold, stating the offer price and giving at least 2 months for them to respond. This notice ought to be registered against the freehold title so that the freeholder cannot sell the building without notice to you.
Counter-Notice

The freeholder provides a counter-notice within the two month deadline giving the price it is willing to accept for the freehold.
Negotiations

If the freeholder’s price is not agreeable, negotiations commence, usually between the respective surveyors.
First Tier Tribunal (Property Chamber)

If no agreement can be reached, an application should be made to the Property Tribunal, within 6 months of the counter notice, for a determination of the purchase price.
Completion

Once an agreement is reached as to the price, funds will need to be collected from all participants and the purchase can be completed.
Costs

Under the relevant legislation, you will be responsible for your landlord’s reasonable costs. This is limited to legal and valuation costs i.e. the landlord’s valuation, legal costs of transferring the freehold and checking your right to buy the freehold. This is a brief overview of the process. Buying your freehold can be complex and we would strongly recommend seeking professional advice at an early stage.
Download this resource as a pdf

To discuss this and to obtain more information contact:
Julian Dickins or Deborah Wason at Dickins Hopgood Chidley Solicitors,
The Old School House, 42 High Street, Hungerford, Berkshire, RG17 0NF 01488 683555

Joint Ownership

Row of Cotswold cottages - illustrating legal advice for jointly owning a house, from property solicitors in Hungerford Berkshire

When two or more people are buying a property together, a decision needs to be made about how to own the property. There are two methods of joint ownership:

  • Joint Tenants: Each of you has an equal interest in the property and if one of you dies, the survivor will automatically inherit the whole of it.

  • Tenants in Common: Each of you has your own interest in the property, distinct from the other, which may be an equal or an unequal part. Your own share in the property would pass by your Will to whomsoever you choose. The amount of your share is usually based on your contribution towards the cost of the property or any work on it.

    • The method of ownership is important to consider in all cases, but particularly in certain circumstances:

    1. Where an unmarried couple is buying a property. The declaration made at the outset is the strongest evidence of intention in the event of a later dispute.

    2. Where you are making unequal contributions towards the purchase price and costs. The person contributing the larger amount of equity may wish to ensure that interest is protected in the event of sale of the property

    3. Where a third party (such as a parent) is contributing to the price or costs. The third party will be advised to obtain independent legal advice on the transaction and it is strongly recommended that an appropriate deed be drawn up setting out the respective interests or contributions of each party.

    4. Where you are buying the property as a buy to let investment. The method of ownership is likely to have tax implications which should be considered before the purchase.

    If any of these circumstances affect you, you must tell us before you purchase the property so we can ensure you receive the right advice and, if appropriate, enter into a declaration of trust. If there is no agreement between you at the outset, there may be problems in the event of separation, divorce or death and a division of the equity which does not truly reflect your intentions could result.

    Joint owners who wish to hold their property as tenants in common should consider entering into a declaration of trust to set out clearly the individual financial responsibilities for the property. Matters to consider are:

  • Who is responsible for the mortgage payments and in what proportions?
  • Who is responsible for the other outgoings (utilities, council tax etc.)?

  • Who is responsible for maintenance and repairs?

  • What happens if there is a change in those contributions?

  • What happens if one of the co-owners stops living at the property before it is sold?

  • What happens if one party wants to sell their share? Would the other party have a right to buy him or her out?

  • What happens if one of the co-owners dies?

    • We would also recommend that a restriction be placed on the property title to protect the interests of co-owners or third parties

    The law relating to joint ownership can be complicated and you may need to seek financial or tax advice before deciding what to do. Please speak with your conveyancer who will be able to refer you to a member of our private client team for further advice, if appropriate.

    Download this resource as a pdf

    To discuss this and to obtain more information contact:
    Dickins Hopgood Chidley Solicitors,
    The Old School House, 42 High Street, Hungerford, Berkshire, RG17 0NF 01488 683555

    Conveyancing process – flowchart for sellers

    Initial Contact

    When you get in touch with us, we will discuss your
    requirements and provide you with a fee for the work involved.
    We will send you a client care letter, setting out our commitments to you and our terms of business, and some property information forms for completion.
    Instructions

    We will receive a memorandum of sale from the estate
    agents, giving us details of the offer, the buyer’s solicitors’ details and any special conditions.

    We will contact the buyer’s solicitors.
    Contract Package

    We will prepare a draft contract and obtain copies of the Land Registry title, and send these together with information forms to the buyer’s solicitors.

    If the property is a leasehold property, we will apply to the freeholder or management company for details relating to service charge, maintenance, insurance etc.
    Replies to Enquiries

    The buyer’s solicitor will carry out searches and the buyer may carry out a survey.

    When they have all of this, they will send us enquiries and we will go through these with you and rep
    Exchange of Contracts

    When you and the buyer are ready, contracts can be exchanged. This is the point at which the transaction becomes legally binding on both of you. The buyer will provide a deposit, which is usually 10% of the purchase price unless otherwise agreed. At this stage the completion date is set.
    Conveyancing process - How to sell a property, from Dickins Hopgood Chidley solicitors - illustrated with a picture of a black front door.
    Completion Day

    When you have moved out of the property you should leave at least one set of keys with the estate agent and we will advise them when keys may be released.

    When we receive the completion money from the buyer, we will complete the transfer documents, arrange to redeem any mortgages, pay the estate agent and our fees and send you the net proceeds.
    Preparation for Completion

    The completion date, agreed on exchange, is the date by which you should move out of the property. You will need to ensure your removal arrangements have been made so that you will be able to vacate the property by the time we advise, usually around lunchtime.

    We will send you a completion statement at this stage, advising you of the net sale proceeds. You will also need to sign a transfer deed which we hand over to the buyer on completion.
    Download this resource as a pdf

    To discuss this and to obtain more information contact:
    Dickins Hopgood Chidley Solicitors,
    The Old School House, 42 High Street, Hungerford, Berkshire, RG17 0NF 01488 683555

    Conveyancing process – flowchart for buyers

    Initial Contact

    When you get in touch with us, we will discuss your
    requirements and provide you with a fee for the work involved.

    We will send you a client care letter, setting out our commitments to you and our terms of business.
    Instructions

    We will receive a memorandum of sale from the estate agents, giving us details of the offer, the seller’s solicitors’
    details and any special conditions.

    We will contact the
    seller’s solicitors.
    Contract Package

    The seller’s solicitor will send us a draft contract and proof of the seller’s title.

    The sellers will have completed information forms about the property which are also provided to us.

    If the property is a leasehold property, further details relating to service charge, maintenance, insurance etc. will also be provided.
    Searches

    We will submit searches on your behalf, to provide us
    with information about the Local Authority records,
    environmental and flood risks, and water authority
    information.

    You will buy the property subject to any matters on public registers so these searches are important.

    During this time, you should ensure your mortgage has been applied for and a survey instructed.
    Enquiries

    When we have the search results and your survey report we will review all of the paperwork and raise any necessary enquiries with the seller’s solicitor.
    After Completion

    We will arrange payment of the stamp duty land tax and register your ownership (and the mortgage if applicable) at the Land Registry. We will provide you with the title information document when this is all finalised.

    If you are purchasing a leasehold property, we will also
    notify the freeholder or management company of your
    details so that all future notices can be sent on to you. We
    will also transfer any shares in the management company to you.
    Completion Day

    We will arrange for funds to be transferred to the seller’s
    solicitor on the morning of completion and when they receive money, they will release the keys via the estate agent. You can move in!
    Preparation for Completion

    The completion date, agreed on exchange, is the date the keys are handed over and you can move into the property.

    Prior to completion, we will provide you with a completion statement, detailing all of the fees and expenses and ask you to transfer funds to us ready for completion.

    There are likely to be some further documents for you to sign and we will notify you of what needs to be done.

    We will also report to your mortgage lender with the completion date so funds can be sent to us, and will carry out the final searches.
    Exchange of Contracts

    When you and the seller are ready, contracts can be exchanged. This is the point at which the transaction becomes legally binding on both of you.

    To exchange contracts, we will need the signed contract from you and the deposit, which is usually 10% of the purchase price (unless otherwise agreed).

    At this stage the completion date is set. You become responsible for the property from the date of exchange so will need to have buildings insurance in place.
    Report on Title

    Provided all enquiries have been answered satisfactorily,
    we will report to you on the property and give you all of
    the results of our investigations. We can then discuss any
    final issues or concerns.
    Download this resource as a pdf

    To discuss this and to obtain more information contact:

    Dickins Hopgood Chidley Solicitors,
    The Old School House, 42 High Street, Hungerford, Berkshire, RG17 0NF 01488 683555

    Commercial property

    Commercial property being built - to illustrate commercial property legal advice from conveyancing solicitors in Hungerford Berkshire

    We are frequently instructed to act in connection with commercial properties such as shops, offices, industrial units, warehouses, hotels and public houses and even on a couple of occasions, public conveniences.

    1. Sale and Purchase

    We can advise on:

    a) The sale of a freehold property or the grant of a long leasehold interest in a property

    Every sale or purchase is slightly different. We like to be involved from the outset to ensure we understand your requirements and the rationale for doing what you are doing. Certain aspects are critically important to get right from the outset, particularly the VAT status of the transaction.

    We are on the panel of most lenders and will normally be instructed by a lender to act for them as well as you. This can often assist a transaction to run more smoothly.

    b) Conditional contracts for the sale or purchase of property

    A conditional contract may be required if something has to happen before a buyer will purchase but the parties wish otherwise to commit to a sale and a purchase. The most common condition is the grant of planning permission.

    c) Option Agreements

    An option is an agreement giving someone the right to buy a property on specified terms for a certain period. The price may be fixed or may depend on an outcome during the option

    period. An option agreement is often used to enable a developer a certain period in which to explore the planning potential of a piece of land.

    d) A deed of pre-emption

    A pre-emption right is a right of first refusal. A common use of such a right is when someone sells maybe a slightly more unusual property, often retaining adjoining land, and wants the right to be able to “buy-back” that property
    when it is next offered for sale

    e) Overage agreements

    Such an agreement is when an additional payment is due, normally to a seller on the happening of an event in the future. This will often be if planning consent is granted which enhances the value of land. The seller will then be entitled to the additional
    payment.

    2. Leases

    We can advise a landlord or a tenant in connection with the grant of a lease.

    We do like to meet you to discuss your requirements and to ensure that we understand what you wish to achieve. If a meeting is not feasible, we will report to you on the documents and we can then discuss with you on the telephone any issues arising from that report

    It might be that there is a lease of the property already in place and you wish for that lease to be assigned to you. We can advise you on the procedure and the various documents which will be required.

    We advise on licences to occupy which are suitable for a short-term let (no more than 6 months) or where space is shared.

    We also advise on the renewal
    of leases and the termination of leases.

    3. Landlord and Tenant Issues

    We advise on various issues which arise between a landlord and tenant including:
    a) Non-payment of rent.

    b) Claims for breach of covenant.

    c) Dilapidations.

    4. Planning

    We advise on planning agreements which are often required as part of the planning process together with Landowners’ Co-operation Agreements.

    5. Financing and Security

    We advise on mortgages, guarantees and debentures.

    We are often instructed by a lender whilst acting in connection with a purchase. Knowing our client can assist in that process.

    Download this resource as a pdf

    To discuss this and to obtain more information contact:
    Victoria Hopgood at Dickins Hopgood Chidley Solicitors,
    The Old School House, 42 High Street, Hungerford, Berkshire, RG17 0NF 01488 683555