Equity Release & Property Issues

Whether you own the freehold or are a leaseholder of a property, there are often matters that require specialist advice.

For instance, if you were thinking of adding an extension, it is important to ensure your builder is qualified, that all planning and building regulations have been considered and that there are no restrictive covenants in the title of your property.

You may be looking to raise money from your property either by increasing your current mortgage or by Equity Release. If your property is leasehold there are several avenues that you can explore to improve the running of your property and its eventual resale value including Lease Extension, Leasehold Enfranchisement and Right to Manage.

It is vital that you have sound professional advice at the outset from a Ford Simey lawyer who specialises in these areas.


Equity Release

Equity Release schemes provide a cash loan from your home’s value that has to be repaid, together with interest, when it is sold.

Equity Release, which is sometimes known by other names such as a lifetime mortgage, a home reversion or home income plan, can be an efficient way to deal with a number of financial issues. It is generally available to most home owners aged 55 or over.

In the first instance, you must own a property in reasonable condition. It can be freehold or leasehold and you must not have an outstanding mortgage. If you do, you will need to use some of the equity release cash to payoff the existing loan.

There are many fund providers to choose from. They will consider your property and your personal circumstances and then offer you a sum of money to use as you wish. A charge (i.e. a mortgage) is placed on your property and although there are no monthly payments, the interest”rolls up and is repaid, along with the original loan, when the property is sold.

Equity Release is a major personal decision so it is vital that you have sound professional advice at the outset from a Ford Simey lawyer who specialises in this area and from an Independent Financial Adviser.

Lease Extension

Attention leaseholders. Once your lease has less than eighty years to run you should consider extending it.

A lease is a Wasting asset. In other Words, as the years go by your leasehold interest becomes worth slightly less. When the lease is less than 80years, it is advisable to consider a lease extension and certainly once it reaches 60 years it will be a necessity.

You have an automatic right, subject to certain provisos, to extend the term of your lease once you have owned an interest in it for two years. Often, the main matter for negotiation is the premium (or price) that you will have to pay to the freeholder to achieve this.

Whilst it is possible for these extensions to be agreed amicably there is a statutory procedure laid down whereby a notice can be served on an unwilling freeholder to ensure that the lease becomes extended. It is important to remember that if you have a mortgage on your leasehold interest, then your mortgage lender will need to be involved in these negotiations,

It is vital to take sound professional advice at the outset of negotiations from a Ford Simey lawyer who specialises in this area.

Lease Enfranchisement

Leasehold Enfranchisement is gaining in popularity and it is an area of law that any leaseholder in a community building should know about.

Leasehold Enfranchisement is the technical name given to the purchase of the freehold in a building by a group of qualifying leaseholders. It is a complicated area of legislation and it is vital that any group embarking on this action takes advice from a qualified and experienced lawyer from the very outset.

The building in which your flat is situated has to come within certain criteria as do the group of leaseholders that wish to purchase the freehold. Whilst it is possible to achieve the desired end by negotiation with the freeholder, sadly sometimes this is not possible and the enfranchisement procedure, as laid down by statute, then has to be followed. Notices have to be prepared and served and strict time limits adhered to.

it is usually recommended that a group of individuals who intend to buy the freehold together enter into a Participation Agreement. This is something that a Ford Simey lawyer who specialises in this area can advise on and assist in its preparation. Depending on your particular circumstances, we would also advise on the advantages of setting up a limited company to hold the freehold.

Right to Manage

Sometimes a group of leaseholders become dissatisfied with the way their freehold is managed and establishing a Right to Manage scheme may be their best course of action.

Right to Manage is relatively new and was brought in by the Commonhold and Leasehold Reform Act 2002. It can be applied when a group of leaseholders in a block are dissatisfied with the way their freehold is managed but either they cannot or they choose not to purchase the freehold.

By forming a Right to Manage company and proceeding along the correct route, it can be possible to take the management of the freehold block into the hands of this new company. Whilst the freeholder would be entitled to one share in the Right to Manage company, they would no longer have control of the management. However, they would still have the right to collect the ground rents.

Again, it is recommended that those individuals who are considering this course of action take detailed independent legal advice before embarking on any action. At Ford Simey, we have lawyers who specialise in this area and who are willing to attend Tenants’ meetings informally.