Tax Implications For 999 Year Lease Extensions

It is not uncommon for leaseholders of flats to join together to purchase the freehold of their building and therefore acquire a share in the freehold.

Whilst the examples below are not exhaustive, there are many reasons for doing this such as:

• you and your fellow leaseholders want to take over the management of the building because you are not happy with how your freeholder carries out those functions
  
  
• you have seen the negative press about leasehold as a form of ownership and you want to make your flat more attractive to potential buyers. A share in the freehold could increase the interest in your flat when it comes to selling

However, even if you have a share in the freehold you will still need to think about extending your lease as it is an interest in its own right and a diminishing asset. One of the key advantages of having a share in the freehold is the possibility of granting each participating leaseholder a 999 year lease. Where there are