Nil premium for lease extension when shares in freehold company also owned?

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    Nil premium for lease extension when shares in freehold company also owned?

    My parents own a lease of a flat and shares in the company that owns the freehold. The property was built, freehold established and 99 year leases granted about 55 years ago; the freehold was bought by the lessees about 40 years ago; most of the leases in the block were extended to 999 year leases for nil premium about 25 years ago, a few more were extended during the next 12 years again for nil premium; only two short leases were not extended, we don't know why. My parents bought one of these short leases (plus the shares) about 20 years ago, that is a couple of years before the last lease extension. They lost track of the lease situation, are now elderly and infirm, would like to sell and have belatedly realised they have a short lease so would like to extend the lease to 999 years like the other leases. Should they have the right to be treated in the same way as the other leaseholders/shareholders, i.e. to extend their lease for nil premium?

    #2
    My gut reaction is to say yes with an ex gratis token amount in recognition of taking It An additional 40 years later. Seems fair, but not a legally researched suggestion.

    Comment


      #3
      Yes.
      My mother was in a similar situation having somehow not gained her 999 year lease when she became a shareholder in the freehold company. After she died we pressed the freehold company to issue the correct 999 year lease for no charge and they did. Our argument was along the lines of if every other shareholder gave themselves a free 999 year lease then she should have had one too!

      Comment


        #4
        Thanks, Tipper. Sounds like your mother's situation was very similar to my parents'. Did you have to take legal advice or you just appealed to the directors' morals?

        Comment


          #5
          Sorry I can't remember the details now but I know it took considerable badgering of the freehold company and long waits for directors' meetings to get it sorted out. I think it was the company secretary that sorted it out in the end. However they issued a variation to the lease rather than a new lease, I presume this was cheaper and finally quicker for them.
          The flat sold later with no problems although it seems the variation was not immediately registered at HMLR which caused a small delay. I don't know whose failure that was.

          Comment


            #6
            I believe the reason for doing variations is that a new lease would involve creating a formal title plan. As far as I know, it does actually create a new lease, though.

            Comment


              #7
              "freehold was bought by the lessees about 40 years ago"

              And the then newly made shareholders would have contributed to the purchace of the freehold.
              Did your parents, or any owner of current flat, contribute Money for purchace of the freehold?
              If so, they should get a free 999 yr lease.
              If not, then expect to pay the same amount the other leaseholders contributed at the time.

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