Recession hits leasehold valuation caseloads precisely at the time when people should be increasing lease extensions. The President of the Leasehold Advisory Service (LEASE) has recently advised at the annual conference that the recession has had an impact on the number of enfranchisement applications being heard by the Leasehold Valuation Tribunal.
Senior President, Siobhan McGrath, advised that since May 2008 enfranchisement applications to the Leasehold Valuation Tribunal have been reduced by as much as 50 per cent. Some may interpret these results as meaning that leaseholders are waiting for market conditions to improve before proceeding to extend their lease. This may either be because leasehold owners need finance in order go for the lease extension (the lack of availability of finance has been well recorded in the press) or leasehold sellers have no intention of selling their property and are waiting for the market to improve in the belief that there are not many purchasers available.
Fridaysmove, however, have received a 50 per cent uplift in the number of enquiries concerning lease extensions as against this time last year. In my opinion, leaseholders are becoming more aware of short leases being an issue when they come to sell the property and are starting the negotiations very early and rather than being faced with going to a Leasehold Valuation Tribunal to determine the cost of the lease extension. According to feedback from our lease extension team leasehold owners are negotiating with the landlord (often via Fridaysmove conveyancing lawyers) to try and agree a price for a lease extension. The Leasehold Valuation Tribunal should be the last course of action for the leaseholder and no stone should be left unturned to try and negotiate a satisfactory price for the lease extension.
The introduction of the PIQ, HIPs and heightened estate agent awareness of the dangers short leases has resulted in a greater focus on lease extensions. Finally, lenders have also tightened their requirements over the last few months in terms of their minimum required lease term on which they are prepared to lend. In recent months, Bank of Ireland and Lloyds Bank have tightened their requirements.