Were you warned about buying a flat with a short lease?
In 99% of cases ‘owning’ a flat means owning a lease of a flat, which gives you the right to use the flat for a set period of time. That period may be many years, but your lease will eventually expire, unless you take steps to extend it.
The Leasehold Reform (Housing & Urban Development) Act 1993 entitles you to extend your lease by adding 90 years to whatever time is remaining, in return for paying a premium. In other words, you can ‘buy’ the extra time from your landlord.
As you would expect, the shorter the lease, the more you will have to pay to extend it. The general rule is that the price you pay to extend a short lease begins to rise more sharply as soon as the unexpired term drops below 80 years.
If when you bought your flat, it had a short lease of 80 to 90 years remaining or less, your conveyancing solicitor should have brought this to your attention. They should have warned you what is involved to extend it. If they did, this would give you the chance to renegotiate the sale price with the seller, or walk away.
Although legislation allows you to extend the lease, you need to have owned the flat for at least two years before you can serve Notice to start the process, and in that time the premium will have gone up. Worst still, you might not realise there is a problem with the lease until several years down the line, by which time the premium you have to pay the landlord will be even higher.
Where a lease is getting short, it is usually possible in the lead up to your purchase to get the seller to serve a lease extension Notice on the landlord. You would then take over the process and avoid the two year wait to serve a notice in your own right. Your solicitor should have told you about this procedure if the lease was getting close to the 80 year point or below.
The good news is you may be able to claim the cost of extending the lease from your old solicitor now.
If you think you have a professional negligence claim against your conveyancing solicitor contact a member of our team today.
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