Lease Extension – what is it?
The Leasehold Reform, Housing & Urban Development Act 1993 gives residential tenants the right to extend their lease.
Why should I extend my lease?
A lease is a deteriorating asset, gradually losing value. As the number of years left on your lease goes down, so does its value and it often becomes harder to sell. It may also become increasingly difficult to raise a straightforward mortgage as the term of the lease reduces. The Leasehold Reform Act 1993 gives many tenants the right to extend their lease for a further 90 years.
Extending a lease is certainly something you should think about if your lease has less than 90 years to run. Beware that when the remaining lease term lease drops below 80 years, the cost of extending a lease can rise substantially.
Who can apply for a Lease Extension?
A residential leaseholder must own their flat for at least two years and the lease must have had an original term of at least 21 years.
Lease Extension – What do I get?
If you decide to exercise your right to extend a lease:
- You can add on a further 90 years to your lease
- You will not have to pay any ground rent for the rest of your lease
How much does Lease Extension cost?
When it comes to extending a lease, a tenant will usually have to pay the following:
- Your own Lease Extension Solicitor’s costs and disbursements;
- Your own formal valuation costs (a valuation should be prepared by a suitably qualified surveyor/valuer)
- The reasonable leasehold valuation costs and legal expenses of your freeholder -you can challenge a landlord’s costs at the Leasehold Valuation Tribunal.
- The ‘Premium’ (i.e. the money payable to your landlord for him actually granting the lease extension). This is made up as follows:
- The reduction in the value of the freeholder’s interest. Put simply, this is the value of the freeholder’s present interest compared with the value of his interest once you have extended your lease; and
- The Landlord’s share of the marriage value. The marriage value is the increase in the value of the flat after the lease extension has been completed (a flat with a shorter lease is, generally speaking, worth more than a comparable flat with a shorter lease). This ‘profit’ element is only achievable because the freeholder has agreed to the lease extension and so he/she is entitled to 50% of the profit, called the ‘marriage value’; and
- Any other compensation due to the landlord.
Want to know roughly how much your total bill for extending your lease is likely to be?
Our team can give you a FREE ESTIMATE of how much your lease extension is likely to cost you – which not only includes both the valuation and legal costs, but, if you wish, can also include a rough estimate of the premium that you will need to pay to your freeholder.
My Lease Extension – What should I do first?
It’s important to make sure you are prepared when planning a Lease Extension:
You should first contact a specialist solicitor to help with the legal documents.
You will usually then need to appoint an experienced chartered surveyor to value the proposed leasehold extension. Again it’s important to appoint someone who specialises in Leasehold Extension valuation work. Our team regularly work with surveyors nationwide who specialise in extending leases and can assist you select the right valuer.
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Thinking about extending your lease? Contact our Lease Extension Solicitors
Extending a lease is complex and it is vital to have specialist advice. Wherever you live, whether you are a tenant or a freeholder, you can rely on the expert lease extension advice from our Solicitors.
Contact us today for a FREE initial no strings attached telephone consultation from an expert Lease Extension Solicitor – just
- call our specialist team for a FREE initial phone consultation on FREEPHONE 0800 1404544 or
- complete the enquiry form below
Comments or questions are welcome.