Most flat owners are aware of their rights for a lease extension – as long as they have owned the property for 2 years they are entitled to require the landlord grant a 90 year extension and that the ground rent be reduced to NIL or Peppercorn.
What happens if you want to sell the flat? Do you still bother with the additional legal cost of the formal Notice ( known as a section 42 Notice) ? Will this delay the sale? What about the cost of the premium for the lease extension?
You can benefit from a certain action and this can benefit the purchasers as well, forget for a minute about the cost of the extension, your key aim is to sell the flat; let’s just look at what can be done with the formal section 42 Notice!
The answer is that the section 42 Notice should be assigned to your purchaser along with your flat.
- Immediately pass on the rights of the lease extension to your purchaser who would otherwise have to wait 2 years from the Registration of their ownership.
- They would benefit from a lower extension price rather than suffer from the affect of a shorter lease and inevitably higher flat values.
- If they cannot agree they would have rights to take the matter to a Tribunal.
- Most importantly you may well be able to sell the flat whereas you may otherwise find it difficult.
AND you need not pay the premium for the lease extension, nor indeed the costs of preparing and serving the Notice; those can be paid for by the purchaser, after all it is they who will benefit.
At Each Side Leasehold we carry out valuation work for either vendors or purchasers. Often a purchaser who has not exchanged contracts wishes to know the approximate premium for the extension so that they can make an objective decision on the amount to pay for the flat’s leasehold interest. We also act for purchasers who have bought the flat with the Notice, we then negotiate with the landlord’s valuers and if we cannot agree act as Expert Valuers at the Tribunal.
A final word of warning: a section 42 Notice must however be formally and properly assigned by the Solicitors otherwise on the completion of the sale of the flat it will be useless and deemed withdrawn. You may well be liable for abortive costs.