A new lease of life for property values

Throughout the UK, short residential leases are a ticking time bomb for unsuspecting homeowners, potentially wiping tens of thousands of pounds from property values. Yet, this problem can easily be avoided by simply extending the lease before it falls under 80 years - a legal process that, if done correctly, can pay for itself many times over when it's time to sell up.

Robert Plant advises that 'Under the 1993 Leasehold Reform Act, qualifying tenants have the statutory right to extend the lease on their property by 90 years, plus the present unexpired term. So, for a lease with 90 years left, this would be extended to 180 years, and all at a peppercorn rent - a small token payment used to fulfil the requirements of a legal contract.'

Why act before the lease reaches 80 years? For the extension of any lease below this length, legislation entitles the freeholder to 50% of the marriage value. This is the increase in the property's value on completion of the lease extension.

Naturally, the shorter the lease becomes, the bigger the rise in value, with the leaseholder facing a much larger bill to extend it. For any lease greater than 80 years, the marriage value is deemed to be nil.

In a turbulent economic climate, therefore, it is crucial for leaseholders to act now to protect their investment, rather than later. It is a point highlighted by the plight faced by many leaseholders in the process of moving home. Sensing their desperation to sell, unscrupulous freeholders have been known to delay the process and even enter into costly private arrangements knowing they have the leaseholder over the proverbial barrel.

The lease extension process begins with a notice served to the landlord and normally takes around six months. In reality, the experience should be hassle-free for the leaseholder, providing everything is done correctly.

Lease extension is a specialised area of law and very time sensitive. Any delays or errors could cost anywhere between a few hundred to thousands of pounds, with the leaseholder forced to wait 12 months before the process can be restarted. Therefore, choosing the right solicitor is an absolute must.

Essex Minerals Plan – Update – 15th November 2013

The Essex Replacement Minerals Local Plan was submitted to the Secretary of State for independent examination by Essex County Council in July this year.

Brian Sims from the Planning Inspectorate was subsequently appointed as the Independent Inspector.

The Hearing sessions for the examination were held at Anglia Ruskin University in Chelmsford and concluded yesterday.  The Inspector's report is due towards the end of January 2014.

Tolhurst Fisher has a number of clients with various interests in the Plan and we will be looking closely at the report when it appears.

 

Reinforcing a culture of corporate rescue

With potential claims from legacy employees often regarded as a hindrance to corporate rescues, the Court of Appeal’s judgement in Crystal Palace FC Ltd v Kavanagh and others should offer potential buyers some assurance.

Provided that pre-sale staff dismissals were to enable the company in administration to continue to trade, the court found that the business could be sold without passing TUPE liability to the purchaser.

Ultimately the case before the court was decided on its unique facts, but the decision is an important development since it widens the previous approach in dealing with actions of the administrator in preparation for an eventual sale.

Staffing issues are one of the many pitfalls in acquiring a business in administration, and with the potential for severe consequences in discovering problems too late, it pays to seek specialist advice early on.

For more information about business acquisitions please contact our commercial department by emailing commercial@tolhurstfisher.com for further information.