What happens to leasehold property when you die?

If we are talking about what is known as a “long leasehold” flat or apartment (i.e. one that was granted for at least 21 years – as distinct from, say, a monthly tenancy), then on death the flat passes as part of the estate under the will of the deceased, and it’s possible for an executor to extend a lease in those circumstances.

NB It’s worth noting that there could be conditions on the lease with regard to ownership of the property. In particular there are an increasing number of retirement flats with conditions on who can and cannot own or even occupy the property. Retirement flats often have a minimum age requirement e.g. 55. If you inherit this type of retirement property and don’t fit the criteria, then you will need to sell the property to someone who does fit that criteria.

Can an Executor Extend a Lease?

Many executors are unaware of their rights to extend a leasehold on a residential flat or house, and the useful benefits this can bring. If leasehold residential property forms part of the estate in question, then, as long as the executor acts to start the application to extend the lease by serving the formal notice of claim within two years of probate being granted, they have the same rights as the living homeowner may have had. The deceased person has to have qualified for the lease extension themselves, which usually means having owned the property concerned for at least two years. And the formal, or statutory route to extend a lease is started by the issue of what is known as a section 42 notice, something that is usually done by solicitors with plenty of experience of lease extension – which is a niche area of law.

A similar right applies to executors wishing to buy the freehold of a leasehold house.

NB if the deceased person had not owned a flat for 2 years then there is no automatic right to a lease extension. In that case, however the executor may still be able to negotiate an informal agreement the freeholder.. This type of negotiation is not regulated, and so you cannot force the landlord into granting an extension. The best thing to do is talk it out and come to a mutually beneficial agreement.

Looking for Specialist Lease Extension Advice? Call our Solicitors on FREEPHONE 0800 1404544 for FREE Initial Phone Advice

What Lease Extension Options Are Open to an Executor?

If these conditions are met, the executor has two options. They can either go straight ahead and extend the lease [possibly by making the most of using some of the cash in the estate to pay the freeholder’s premium, surveyors fees and both sets of legal costs], or start the process with the aim of putting the property on the market.

As long as the executor has started the process of extending the lease, this can then be handed onto the person who buys the house or flat. The new purchaser therefore doesn’t have to wait for the two years needed for him to start the lease extension and saves money too.

A property which already has a lease extension underway is worth more than one which does not, and it is more appealing to home buyers too.

What is the process if it is the freeholder who has died?

When a freeholder passes away, the person who is responsible for inheriting their estate, determined through a valid will or the rules of intestacy, will become the new freeholder. And it’s this new freeholder that the leaseholder will need to deal with in future to obtain buildings insurance details if they want to sell their property or extend their leasehold as well as purchase the freehold.

However, in cases where there are no next of kin then what is known as “bona vacantia” or “ownerless property” applies – this means that the freehold passes to the Crown. And it’s the Treasury Solicitor who is responsible for handling these kind of freehold on behalf of the Crown – and they are usually happy to give leaseholders an opportunity to purchase the freehold

Thinking of a Leasehold Extension? Contact our Experts

Here at Bonallack and Bishop, we have a team of specialists in both Leasehold Enfranchisement and Lease Extension – that’s all they do and  they can represent you wherever you live in England and Wales – so for  FREE initial phone advice just

• call our specialists on 0800 1404544 for FREE initial advice or

• fill in the enquiry form below

Solicitors specialising in leasehold extensions with missing freeholders.

Lease extensions where your freeholder is an absentee and you can’t track them down are more complicated. Why?

Many mortgage lenders simply refuse to lend money is on any leasehold properties with an absentee freeholder – which can obviously seriously affect the chances of a leaseholder in obtaining a mortgage or even marketing the property. This problem is made worse if the remaining lease term itself is relatively short.

It is likely to prove expensive, complex and lengthy to serve a statutory notice enforcing a lease extension if there is no freeholder or their whereabouts is unknown. In the Leasehold Reform (Housing & Urban Development) Act 1993, provision was made for dealing with the problem of freeholder absenteeism by applying for what is known as a Vesting Order through the County Court, which also has the power to grant a dispensation from the requirement to serve notice entirely.

What is a vesting order?

Any leasehold flat owner seeking to extend their lease or group of leaseholders seeking to purchase the freehold of their block or claim the right to manage it, must produce evidence demonstrating reasonable efforts have been made to trace the absent freeholder before a Vesting Order can be granted.

Admissible evidence to prove this includes

• providing freehold Office Copies (i.e. Proof of the freeholder’s ownership) showing the last known address of the freeholder,
• proving they no longer own that property and have moved to an unknown address, or
• providing statements confirming that a visit to the freeholder’s last known address has not provided the leaseholders with a forwarding address.

The County Court will either set a date for the Vesting Order hearing or, alternatively, rule on the basis of the presented facts if the judge is satisfied that reasonable efforts to trace the freeholder have been made.

When your case has been proved, the Court will issue a Judgment setting out that the freehold may be acquired by the leaseholder(s) with funds to be ‘vested’ in the Court and defer the case to the First Tier Property Tribunal [which replaced the old Leasehold Valuation Tribunal or LVT in July 2013] for a ‘reasonable’ premium, in case the freeholder resurfaces in the future.

Vesting orders and your absentee freeholder – is a hearing always necessary?

The First Tier Property Tribunal also hears many absentee freeholder cases without a full hearing by issuing directions for the leaseholders to comply with and timescales for documents to be produced by, such as the County Court Judgment, copy leases, the valuation for the leaseholders and the proposed TP1 land transfer form.

Whilst the leaseholder may, following grant of a Vesting Order, benefit from acquiring the freehold at a relatively low premium and then grant themselves a lease extension for a nominal premium, the procedure, legal costs and sheer aggravation involved could still be significant.

Instruct our team of lease extension, right to manage and enfranchisement experts today who will be able to guide you through this complex process and help eliminate the worry from what can be a stressful situation.

Problems with an Absentee Freeholder? Looking for a specialist Lease Extension Law Firm?

Wherever you live nationwide, if you’re thinking of applying for a lease extension or a collective enfranchisement, call us today – our team are specialists in this really complex field and are happy to provide you with free initial legal advice on the phone.

So for advice from a specialist lease extensions law firm;

• Phone our team on FREEPHONE [0800] 1404544 for FREE NO STRINGS ATTACHED initial phone advice OR
• Email us using the contact form below

It pays to know what you are doing when you are extending a lease as an understanding of the process will help you get things done as efficiently and quickly as possible. This guide takes you through some of the key facts and figures involved in lease extension so you will have a better understanding of what you are dealing with when it comes to putting everything into motion.

1993 Leasehold Reform Act
This is the Act of Parliament that gives tenants the right to a lease extension. Its full title is the Leasehold Reform, Housing and Urban Development Act 1993 (as amended). This is what sets down the process you are required to follow when extending a lease, so it is worth getting to grips with it.

21
This is the number of unexpired years that must have been left on your original lease if you are going to be eligible for a leasehold extension.

2
This is the number of years you need to have owned your property before you are eligible to extend the lease. However, the only criterion is that you own the property – you don’t necessarily have to have lived there.

80
If you have less than 80 years left on your lease when you start the process of extending your leasehold, you will have to pay an additional cost known as the ‘marriage value’. This increases the costs of lease extensions, so if possible you should definitely start the process as early as you can – before you pass that 80 year deadline.

90
This is the number of years you are able to extend your lease for under the 1993 Act. The number of years left on your original lease is added to this, so if you had a lease for 93 years and you extended it by 90 years, your new lease would be for 183 years.

Peppercorn rent
When you have extended your lease, you will be charged a peppercorn rent on it. This basically means that your ground rent on the new lease is negligible and it is one of the reasons people take the decision to extend their lease in the first place.

First-Tier Property Tribunal
If you are unable to come to agreement with your landlord over how much extending your lease should cost, you will need to ask your solicitor to refer the case to First-Tier Property Tribunal (previously known as the leasehold valuation tribunal). This is where the case will be debated and settled.

In need of a specialist Lease Extension Law Firm?

Making sure the law firm you appoint to manage your lease extension really understands lease extension is critical. Very few solicitors deal with lease extensions regularly – we have a three strong team dedicated to nothing but lease extension, collective enfranchisement and right to manage company formation.Wherever you are in the UK, for a FREE initial telephone consultation on extending the lease on a flat, either ;

• call our Solicitors today on 0800 1404544
• or email us using our contact form for FREE initial advice and a FREE quote or we can arrange to ring you back