Residential property and conveyancing solicitors

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Leases, licences and tenancies

What we can help you with

  • Assured shorthold tenancies
  • Licenses to occupy
  • Leasehold extension
  • Leasehold enfranchisement/purchase of freeholds
  • Rights to manage leasehold property

Why Thomson Hayton Winkley?

If you own the “freehold” to a property, you have absolute ownership.  But sometimes someone else owns the freehold and the person who lives there might have:-

  • a long leasehold interest – meaning that they have rights of possession and use for a fixed period of time.  This is typically the case for flats which share a structure, but can also be the case for some housing developments.  To all intents and purposes they “own” the property – having paid a lump sum on purchase – but there are important differences from owning freehold property.
  • occupation rights only,  under a license, or a tenancy, such as an Assured Shorthold Tenancy (AST) – their rights are less secure and they will usually pay rent.

As Solicitors dealing with leases and tenancies we know that they can be complex and that each different type of lease, licence or tenancy has different characteristics, considerations and challenges.

So whether we are acting on the purchase of an apartment or flat requiring the assignment of a lease, or the letting of a cottage under an Assured Shorthold Tenancy, you can be certain that we know what is involved and ensure that you (whether you are a landlord or a tenant) are advised of all the legal implications and that all the documentation involved protects your interests as best it can.

Sometimes tenants under a long lease might want to extend the term, or look into the possibility of purchasing the freehold.  We have lawyers with experience of these procedures and will advise you of your options.

If a dispute arises over your lease or tenancy, then our Dispute Resolution Department can help you find the best solution for the issues involved.

Answering your questions

What is an Assured Shorthold Tenancy?

If you are letting or renting a property short-term (6 months or more) then it is likely to be done under an Assured Shorthold Tenancy – known as an AST.  Whilst there are some exceptions, the Housing Act 1988 (as amended) provides that tenancies of 6 months or more will be ASTs.  This gives the tenant security and protection aims to regulate the letting process.  If you are a landlord it is important that you comply with the various statutory requirements of the 1988 Act and supporting Regulations – otherwise you could face difficulties evicting the tenant if you need to do so.  You should therefore take advice from a Solicitor or Letting Agent when setting up an AST to ensure you do not get caught out.

What is a Licence to Occupy?

It is possible to occupy residential property under a Licence – and not an Assured Shorthold Tenancy.  Examples of this could be where someone is renting a room and does not have exclusive occupation rights, or where somebody in the process of buying a house is permitted to move in before completion take place.  A licensee has less rights and protection than a tenant under an AST.

A licence can be implied without there being a written agreement in place and sometimes this can cause complications.  Therefore it is important that you take advice and where appropriate seek a written Licence to avoid potential problems in the future.

Can my lease be extended?

Leasehold properties usually have a ‘shelf life’ of around 125 years, which at that length of term is a valuable asset. However, as the lease term diminishes over time, so does the value of the property, making it harder for a buyer to secure a mortgage over the property.

Many leaseholders therefore look to extend the term of the lease, to make it more valuable, sellable and more attractive for mortgage lenders. However, extending your lease does not come without cost implications.

Often, the costs associated with extending a lease are largely down to the increase in the value of the leasehold property, once the term of the lease if extended. This is known as ‘marriage value’.  Once the lease has less than 80 years remaining on it, then any lease extension is subject to ‘marriage value’.  Marriage value reflects the increase in the value of the property, following the lease extension, due to the number of years now remaining on the lease.  It is therefore advisable to extend your lease when it has at least 81 years remaining on it, because the ‘marriage value’ will be zero.

When you are looking at extending your lease, you have two options to choose from. You can either choose to extend your lease through the statutory route governed by the Leasehold Reform Housing Urban Development Act 1993, or through an informal approach to the Landlord.  The latter is usually considered to be the quicker, cheaper and more flexible option.  But if that is not possible, the statutory route is available.  This requires formal notification to be given and strict timetables to adhere to.

It is worth noting that you must have been registered as the legal owner of the property at the Land Registry for at least two years, before you are able to apply for a lease extension through the statutory route.  We are happy to advise you of your options and the likely costs involved.

Can I buy my freehold?

Leaseholders who own a house can buy the freehold either under the provisions of the Leasehold Reform Act 1967 using the “formal route”, or by coming to an agreement with the freeholder – the “informal route”.

Formal Route – To apply under the Act, you must  meet certain criteria and both parties need to follow a procedure and strict timescales provided for by the Act. This route offers more protection to a leaseholder if the parties cannot not agree the terms and/or the price and you can apply to the First Tier Tribunal to decide on the issue.

Informal route – You can however start the process informally, by approaching the freeholder to enquire if they are interested in selling you the freehold. The freeholder is not required to respond or to agree to sell but if they do agree, then both parties can negotiate.

It is worth starting the process informally as it could save time and money. But if negotiations fail, then leaseholders who meet with the criteria, can use the formal route outlined above.


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