Purchasing the freehold of your building can often be a very stressful and time-consuming activity. Once the freehold has finally been acquired, many people want to forget about enfranchisement all together and get back to their real lives.
However, there is one very important final action you should take once your freehold purchase has been completed and it’s a step that, if forgotten, could be very costly in the future.
It is worth remembering that once you have bought a share of the freehold, you still have a leasehold flat with the same lease length as it had before you started the process.
We are receiving more and more calls from flat owners who bought a share of their freehold in the past but did not go on to extend their lease. Extending the lease is a vital step and one that should be considered without delay as failure to extend within a few months of freehold purchase could lead to great problems in the future.
- Buyers and mortgage lenders are still interested in lease length, even if the flat has share of freehold. If the lease has less than 82 years to run, depending on the location, many lenders may refuse to lend/remortgage.
- Failing to extend leases soon after buying a share of the freehold will create taxation problems for the freehold-owning company.
- If you don’t live in your flat there could be further complications surrounding your personal capital gains tax in the future.
- Potential changes to the ownership of the freehold company. This may seem like a remote possibility, but who knows what the future holds? If the limited company that owns your freehold were to be struck off for whatever reason, you could lose your share of the freehold.
Don’t delay lease extension any further.
The actual cost of extending your lease immediately following the purchase of your share of freehold is nothing, it is free of charge! You would only have to pay some nominal legal fees for the extension to become legal and registered at the Land Registry.
In an ideal world, all the participants of the freehold acquisition would do this at the same time, using the same solicitor or intermediary, taking advantage of the opportunity to change things in the leases, other than their length (and achieving some cost benefits at the same time).
Of course, this process of ‘collective enfranchisement’ isn’t always feasible and we would suggest that anyone looking to extend a lease just looks after number one.
If you would like to contact Leasehold Solutions about extending your lease, please call us for a free initial, no obligation consultation on 020 3327 1177.