When searching for a new property on the market, you might find a place that suits you perfectly in your price range and circumstances – however it may be ultimately burdened by its pesky short leasehold title.
As we have discussed in our other blog posts, leasehold properties are a controversial issue in the current political climate. This is particularly due to the 80-year ‘trap’ where the ‘marriage value’ begins to attract a greater premium payable to the landlord for extension/enfranchisement. This has made the demand for tenants to extend their lease or outright purchase the freehold title ever increasing.
Your right to statutory purchase the freehold or extend the lease of a property is only made available to you when you have owned a property for over two years. As a prospective purchaser, this should leave you unable to acquire the freehold title in a leasehold purchase – or does it?
Assigning the right of an extension or enfranchisement is a common workaround for prospective purchasers.
In this arrangement the current owner, who has presumably owned the property for more than two years, serves the statutory notice for either extension or enfranchisement then assigns the benefit & responsibility to you. This means you can achieve the statutory benefit, while not needing to satisfy the two-year ownership test as a prospective purchaser!
If you are interested in pursuing this arrangement as part of a leasehold purchase, you should inform the seller and current owner of your intentions as soon as possible. That way, each party can be properly advised on the nature of the arrangement and ensure the benefits and responsibilities are properly allocated.
A crucial point to note is that in any prospective leasehold purchase, the current owner serves the relevant statutory notice on the freeholder before exchange takes place between buyer and seller. This allows the seller to satisfy the ownership test when assigning the benefit to the buyer.