There are many advantages of being the owner of a long leasehold property, however as the lease would have been initially granted for a fixed number of years, it is a diminishing asset. As time passes, and the lease length becomes shorter, your property loses value. Your home could be harder to sell if your lease is too short and mortgage companies are reluctant to lend on short leases. If your Lease has less than 90 years remaining, you should start to think about extending it. Do this now to protect your interest and save money in the long run.

Who can extend their lease?

Residential leaseholders who satisfy the criteria have the right to protect the value of their asset by extending their lease. To qualify you must have owned the property for at least 2 years and your lease must have been granted for at least 21 years in the first place.

You will not be eligible if the freeholder is a charitable housing trust and the flat is provided as part of the charity’s functions. Lease extensions only apply to residential leases so you are not eligible if you have commercial lease. For Commercial leases, see Commercial Lease Renewal.

What do you get when you extend your lease?

You are entitled to add a further 90 years to the term of their lease and reduce the ground rent to “a peppercorn” (meaning no ground rent payable).

How much does it cost?

You are buying 90 years from the freeholder and in return have to pay a fair price (often called a premium) to your landlord. The law provides a formula for working out the premium so you’re a guaranteed a fair price. The actual figure you will pay depends on how many years are left to run on your lease, the value of your property and your current ground rent. You can get a representative example from a lease extension calculator but remember to take those calculations with a pinch of salt. In every case, you will need the expect advice of a surveyor whose role is to advise you on the likely premium payable and to negotiate the premium on your behalf with your freeholder’s surveyor.

What about other costs?

In addition to the Premium, you have to pay: your legal costs, your surveyors costs and your freeholder’s legal and valuation costs. Your legal fees start from £1500 plus VAT. A good surveyor may charge in the region of £500 – £750 plus VAT and we are happy to make some recommendations. Your freeholder’s costs are limited to “reasonable costs” and are subject to challenge and review.

Why extend now?

It’s tempting to put off incurring expenses but, with leasehold property, delay is rarely a good idea. The longer you leave it to extend your lease the more it could cost you.

Potential buyers are put off by a short leases and if your long term aim is to market the property, you will want to resolve issues first before marketing. Many purchasers will either not make an offer in the first place or, pull out as soon as they become aware of a short lease. Some buyers might be interested but insist on the lease being extended before they buy which will cause delays and increase your conveyancing fees. Even if you find a cash buyer willing to purchase your short lease, they will invariably want to reduce the price, often by more than it would have cost you to extend the lease yourself.

What is the process?

Where can I get more information?

We are happy to offer advice on the law and the procedure and always offer an initial consultation for free. Contact us and we can put you in contact with a specialist valuer to establish how much your lease extension is likely to cost.

For further useful information, you may wish to visit the government funded website The Leasehold Advisory Service.

I have a complex leasehold framework or situation.

Everyone’s situation is unique but some legal frameworks are more complex and challenging than others.

Some residential leases are structured on the basis of three tiers with the freeholder (the landlord) at the top, the head leaseholder (usually a management company) owning an intermediate lease and the individual leaseholders (the flat owners) on sub-leases. A head lease can make life easier for the freeholder but may cause flat owner issues when extending their leases.

Other leases are complicated by third parties to the lease. This could be a third party management company, a residents’ management company or even a residential association or Right to Manage Company.

Having more than two parties (instead of simply a landlord/freeholder) can push up your legal costs and add extra complications. We are specialists with experience in dealing with all types of leasehold frameworks and lease extensions. We’ll guide you through the process using plain English. You’ll always be kept up-to-date and your file will be handled by a partner with years of experience of lease extensions. We’ll always be at the end of the phone throughout the process.

For a free no obligation initial consultation call 01202 79 89 17 or email contact@ghwc.co.uk.