Flats and apartments (and some houses) have a leasehold legal title which only lasts for a certain number of years, unlike a freehold title which lasts indefinitely.
If a lease has around 80 years (or less) left remaining on it, a future buyer or mortgage lender will require the lease term to be extended, or you will find that you have to sell the property for a lot less than you could.
If the lease drops below 70 years, lenders may refuse to loan a mortgage for the property and you will reliant on finding a cash buyer.
We can help:
1. Contact us with your property address
2. Let us know how much your property is worth (or at least how much you think it is worth)
3. We will confirm how long is left on the term of your lease
4. We will check who your freeholder is – he has dealt with most of them so knows their particular quirks and requirements
5. We will seek the professional advice from the specialist panel of surveyors he works with to have an approximate value given on what a lease extension will cost
6. You are given an estimate of the total cost of a lease extension including the likely premium for the lease extension, the legal costs of the freeholder, the surveyors costs for a full valuation and Eric’s legal fees. Some freeholders will not agree to grant a lease extension willingly so we will also let you know how you can go about forcing your freeholder to grant the same.
The cost of a lease extension could be several thousand pounds. So it’s important that you think about the length of the lease when you buy the property and understand the potential cost of extending it in the future. Our team of dedicated experts can deal with all legal aspects of having your lease extended.
Leasehold ownership comes with some important responsibilities. This is particularly true if you want to retain the value in your investment and limit the amount you will need to pay out in the future. Extending the term of your lease is one way of achieving this, but it is often less straightforward than it sounds. Here are our top tips for getting the lease extension process right and getting the outcome you want.
KEEP AN EYE ON HOW LONG IS LEFT
When you first bought your property, the lease expiry probably seemed a long way off, but bear in mind that the shorter the term of the lease becomes, the more value it is losing.
Once a lease drops below 80 years remaining, “Marriage Value” becomes payable to the landlord as part of the premium and this can dramatically increase the cost of extending your lease. If your lease has a period of less than 85 years to run, do something about it now.
Once a lease gets down to the region of 70 years remaining, it can become difficult to get a mortgage company to lend on the property which makes it increasingly difficult to sell.
FIRST STOP – THE LEASE EXTENSION SPECIALIST’S OFFICE
We’re not saying this for our benefit; lease extensions can be complicated. It is a specialist area of law, even within the property law discipline, so you will need to find someone who has the right expertise. Not all conveyancers are familiar with the ins and outs of lease extensions, so make sure that you are working with a lawyer who is.
BE CLEAR ABOUT WHAT YOU WANT TO ACHIEVE
Discuss with your lawyer why you want to extend your lease. Is it to get the maximum number of years out of the lease? For example, do you want to reduce your ground rent to nothing and live in the property without having to worry about extending the lease again in the near future? Alternatively, you may want to top up your remaining lease term just enough so that you can sell your property and pay a lower price for your lease extension premium.
CHOOSE THE RIGHT WAY TO EXTEND YOUR LEASE
There are usually two options: private (‘voluntary’) lease extensions, or statutory lease extensions.
The private route is where the parties freely negotiate the terms of the lease extension (such as premium, rent, and years to be added to the lease). There is no obligation for the landlord to negotiate or to extend the lease, but the landlord can be compelled to extend your lease if you are eligible for, and opt for, the statutory route.
The statutory route can be more costly and more complex to deal with; that is why we sometimes recommend starting with private negotiations and having the statutory route as a back-up.
Ask us which would be the better option for you.
JUDGE THE SITUATION WELL
Whilst you can approach your Landlord informally in the first instance to see whether they are willing to voluntarily grant you a lease extension, (without the need for the formal statutory process) you should not formally agree anything with them. As the Landlord can offer whatever terms they like, let one of our lawyers check that they are being reasonable before you agree to anything.
Which route you take really comes down to the best way to get the outcome you want. This varies from landlord to landlord, so your insight into what yours is like, and the way they have dealt with you and with others in the past, will be really helpful.
Remember, even if you have negotiated terms that you think are fine, don’t agree to them (and don’t pay any money over) without first getting your lawyer’s opinion.
GET A HANDLE ON COSTS
Regardless of which route you take to extend your lease, you will normally be responsible for your landlord’s legal and valuation costs, as well as your own. These are on top of the premium you pay to buy the lease extension, so you will need to budget for all of this. We can give you an estimate of the total for all of these costs if you give us the property address.
BEWARE OF ONLINE LEASE EXTENSION CALCULATORS
Talk to a real person! There is a time and a place for online tools, but when it comes to your lease extension, it is important that you have proper valuation advice from a suitably qualified, experienced surveyor or valuer. We will be able to suggest a suitable valuer in your area.
The valuation they give you isn’t the same as the market appraisal you would get from an estate agent, and it is much more comprehensive than an online calculation; it is a complex formula that depends so much on the intricacies of your property and lease.
Be warned - Getting the premium wrong could mean that your statutory claim for a lease extension is deemed to be invalid, so it is vital that you use a specialist lawyer and a specialist valuer.
DON’T THINK YOU ARE TIED TO YOUR PROPERTY
Even if you have planned a lease extension, or are part-way through the process it doesn’t mean that you are stuck in the property until the deal is done, it is still possible to sell.
If you are eligible for a statutory lease extension, our team will be able to help assign the benefit of it to your buyer. It means that your buyer steps into your shoes and completes the lease extension once they’ve bought your property.
Alternatively, we can arrange for your private lease extension to be completed along-side the sale of your property.
CONSIDER A JOB LOT
The chances are that your neighbours’ leases were granted around the same time as yours, for the same length of time. If you need a lease extension, they probably do too.
If we are instructed in bulk (multiple lease extensions of similar leases at the same time) we are usually able to offer discounted ‘per flat’ legal fees.
ACT SOONER RATHER THAN LATER – IT WILL SAVE YOU MONEY
The shorter the lease becomes, the more difficulties you will have in selling it. Once your lease drops below 80 years, it is far more expensive to get it extended - that’s why we always recommend not letting your lease get anywhere near that short! If your lease has already become that short though, act quickly to get the extension in place.
Short leases mean you are against the clock, with money to lose if you leave things too long.