Lease and Freehold Acquisition

The current economic climate offers some surprising opportunities for home owners. The property market has slowed so now is a good time to initiate lease extension or enfranchisement claims, and therefore fix valuation dates.

Victoria Estates advise you through every step of this complex process and, by providing a report and acting in the lease extension negotiations, could save you money.

What Is A Lease Extension?

As an individual tenant you may have the right to a new lease of your flat. Legislation allows you to buy a new lease with a term of 90 years plus the remainder of the term of your existing lease. The process of buying a new lease is very similar to collective enfranchisement. We can advise and assist you throughout every stage of this process.

In order to be suitable for a mortgage to be taken out on a property, lenders will often insist that the lease has a minimum period to run. The exact number of years will vary from lender to lender. You can check what minimum term is acceptable to your lender by contacting them or by searching on the Council of Mortgage Lenders website at:

http://www.cml.org.uk/cml/handbook and select.

• your region (England and Wales)

• the name of your lender)

• Part 2

The relevant section is at 5.14.1.

In addition, if you are selling your home, you may find that buyers may be reluctant to buy a property where the lease has fewer than 60-70 years to run as they themselves may have difficulty in obtaining a mortgage or reselling it. In these cases, a buyer may insist that the lease is extended as a condition of buying your property.

Extending a lease can be a difficult process and if you’re planning to obtain a mortgage or sell your property it pays to get advice early.

What Is Collective Enfranchisement?

Collective enfranchisement is the right of leaseholders to buy the freehold of the building in which their flats are situated. Owning the building will give the leaseholders complete control over their building. We can help you to achieve this.

What We Do:

• Assess your eligibility to buy the freehold;

• Help you choose a surveyor who can advise on the likely purchase price of the freehold;

• Prepare a Participation Agreement;

• Help you to form a company to buy the freehold;

• Prepare and serve a notice on your landlord which begins the process of enfranchisement;

• Register the notice at the Land Registry;

• Where the freeholder will not accept your offer price, prepare your application to the Leasehold Valuation Tribunal, comply with its directions and arrange for your representation at a hearing;

• Complete all conveyancing formalities associated with the purchase

Stages of conveyancing

To help you gain a better understanding of the Conveyancing process, below is our step by step guide to a typical sale and purchase transaction.

Sale

• 1. Seller’s Conveyancer instructed.

• 2. Seller’s Conveyancer confirms instructions by letter setting out the terms of business and fixed fee costs.

• 3. Seller’s Conveyancer carries out proof of identity checks and sends out a fittings and contents form and property information form(s) for completion. If the property is leasehold, additional information will be required.

• 4. Seller to complete fittings and contents form and property information form(s).

• 5. Seller’s Conveyancer obtains title deeds from deeds holder or official copies of the title register and any other documents required from the land registry and details of the amount outstanding on any existing mortgage.

• 6. Seller’s Conveyancer prepares the draft contract and supporting contract documentation and sends to the buyer’s Conveyancer.

• 7. Buyer’s Conveyancer checks the contract and supporting contract documentation and raises pre-contract enquiries with the seller’s Conveyancer.

• 8. Seller’s Conveyancer and seller answer pre-contract enquiries.

• 9. Buyer’s Conveyancer confirms they have acceptable results from their searches, are happy with the answers to pre-contract enquiries and are in receipt of a mortgage offer (if any).

• 10. Seller and buyer agree on a completion date and contracts are formally “exchanged” - meaning both parties are legally committed to the transaction. Seller’s Conveyancer will obtain a settlement figure to repay the outstanding amount on any existing mortgage, if applicable. Buyer’s Conveyancer drafts a transfer deed and sends to the Seller’s Conveyancer.

• 11. Seller’s Conveyancer checks the transfer deed and sends to the seller for signature in readiness for completion.

• 12. On completion the seller must vacate the property at a time to be agreed and make arrangements to hand over the keys, usually through the estate agent. Buyer’s Conveyancer will send the proceeds of sale to the seller’s Conveyancer and the seller’s Conveyancer will arrange for the keys to be released to the buyer. The seller’s Conveyancer sends the title deeds and transfer deed to the buyer’s Conveyancer together with an undertaking to use the proceeds of sale to discharge any existing mortgage. The seller’s Conveyancer then pays the estate agent (if one was used), repays the amount owing to the existing mortgage lender (if applicable) and takes payment for their Conveyancing service costs.

• 13. Once all the payments have been made all the remaining money from the sale will be transferred to the seller, usually by bank transfer on the day of completion.

Purchase

• 1. Buyer makes an offer on the property, which is accepted by the seller.

• 2. Buyer’s Conveyancer instructed on acceptance of the offer

• 3. Buyer arranges a survey on the property, and makes an application for a mortgage (if required).

• 4. Buyer’s Conveyancer confirms instructions by letter setting out the terms of business and fixed fee costs.

• 5. Buyer’s Conveyancer contacts the seller’s Conveyancer to obtain the contract pack.

• 6. Buyers Conveyancer checks the contract pack, raises pre-contract enquiries, carries out the necessary searches and obtains a copy of the mortgage offer.

• 7. Sellers’s Conveyancer and seller answer pre-contract enquiries and return these to buyer’s Conveyancer.

• 8. Buyer’s Conveyancer reviews and reports to the buyer on the contents of the contract pack, pre-contract enquiries, the result of the searches and mortgage offer. The buyer then considers this report and raises questions on anything that is unclear.

• 9. When the buyer is happy to proceed, arrangements are made for the deposit to be paid to the buyer’s Conveyancer in readiness for exchange of contracts.

• 10. Seller and buyer agree on a completion date and contracts are formally “exchanged” - meaning both parties are legally committed to the transaction.

• 11. Buyer’s Conveyancer prepares a draft transfer deed and completion information form and sends these to the seller’s Conveyancer for completion.

• 12. Seller’s solicitor approves the draft transfer deed and a final copy is made. This may need to be signed by the buyer before being sent to the seller’s solicitor for signature by the seller in readiness for completion.

• 13. Buyer’s Conveyancer prepares a completion statement, carries out pre-completion searches and applies to the buyer’s mortgage lender for the mortgage loan.

• 14. On completion, the buyer vacates the property by the agreed time and buyer’s Conveyancer sends the proceeds of sale to the seller’s Conveyancer.

• 15. Seller’s Conveyancer releases the keys to the estate agent (if one was used) and sends the title deeds and transfer deed to the buyer’s Conveyancer together with an undertaking to repay any existing mortgage.

• 16. Buyer’s Conveyancer sends the stamp duty payable to HMRC, receives the title deeds, transfer deed and proof that the seller has paid the outstanding mortgage on the property.

• 17. Buyer’s Conveyancer registers the property in the name of the buyer at the land registry.

• 18. The buyer receives a copy of the registered title from the land registry. Any documents required by the mortgage lender to be retained by them are sent on by the Buyer’s solicitor.