The Lease Extension Process – How To Extend Your Lease

Understanding what you need to do to extend your lease can be complicated. With so many different sources of information and so much legal language to interpret, it can be difficult to know what you need to do to begin the lease extension process.

At Ashley Wilson Solicitors, we are experts in lease extension and the lease extension process. Read on to find out more about the process, and the steps you need to take in order to successfully extend your lease.

This guide will cover:

  • Meeting the criteria for lease extension
  • Pre-notice legal work and serving your notice
  • Your landlord’s response and negotiations
  • Conveyancing procedure and finalising your lease
  • Landlord development right and breaking the lease
  • Withdrawing from the process
  • How long the process takes
  • Whether you can sell your property during the lease extension
  • How much the lease extension process costs
  • Throughout the lease extension process, you will need to:

  • Make sure you meet the criteria for lease extension (see below)
  • Appoint a lease extension valuer
  • Appoint a lease extension solicitor
  • When You Can Extend Your Lease

    In order to qualify for a lease extension, your original lease must have been granted for longer than 21 years, and you have been the registered owner of your flat for at least 2 years

    If you meet these criteria, you are allowed to extend your lease by 90 years, have the ground rent removed and for defects in your lease to be corrected.

    Getting A Valuation

    The next step in extending your lease is to get a valuation from a specialist lease extension valuer.

    They will be able to tell you what you can expect to pay following negotiations and the price you should be putting forward to your landlord.

    This also helps make sure that during negotiations, you’ll pay a fair price for the lease extension.

    Pre-Notice Legal Work

    The solicitor you appoint will be able to do the following as part of the pre-notice legal work:

  • Check the landlord’s and any intermediary titles.
  • Checking the leasehold title and lease to prepare the statutory initial notice (Section 42 notice) which is served on the landlord.
  • If your landlord is missing, you will need to consult your solicitor on the best way to move forward with the process.

    Serving the Notice to Your Landlord

    Your solicitor will then draft the initial notice and serve it to your landlord which begins the statutory procedure, sets the valuation date and puts forward your offer price.

    The solicitor will then register the initial notice at the land registry to protect you against your landlord selling or dealing with the property without the buyer being bound by the terms of your initial notice.

    Your Landlord’s Response to Your Notice

    Before responding to your initial notice, your landlord can:

  • Inspect the flat.
  • Request formal confirmation of your title.
  • Require payment of 10% of the sum offered in the notice.
  • When your landlord responds, they have the following options:

  • Accept the right to extend the lease and the sum offered.
  • Accept the right to extend the lease but dispute the sum offered (this is the normal situation).
  • Dispute the right to extend the lease.
  • Not respond (this is unusual but great news for you).
  • Negotiations and the Tribunal

    If the landlord fails to respond within the time limit, then you are entitled to a new lease on the terms set out in the Initial Notice i.e. at the proposed offer price.

    If the landlord accepts the right to extend the lease and agrees to the proposed premium to be paid then you will proceed to the conveyancing procedure detailed in the next section.

    If the landlord accepts the right to extend the lease but disputes the proposed premium to be paid, the parties’ valuers will attempt to negotiate the disputed sum.

    The Tribunal

    If the premium is not agreed during an initial six month period, we will make an application to the Tribunal to ensure that your claim remains ‘alive’ and is not ‘deemed withdrawn’.

    The Tribunal will list the matter for a hearing approximately three months after the application is made. In most cases a Tribunal application simply forces your landlord to negotiate sensibly and for terms to be agreed.

    If the matter does proceed to a Tribunal hearing, the Tribunal will determine the price payable and any other disputed lease terms. You are unable to recover your costs from the landlord in this regard (both parties pay their own costs).

    Conveyancing Procedure and Finalising Your Lease

    Once the premium for the lease extension has been agreed in negotiations or determined by the tribunal, we will then finalise your new lease. This will involve:

  • Drafting and agreeing the terms of the lease extension with the landlord’s solicitors.
  • Arranging for execution and completion of the lease extension deed.
  • Registering the new lease at the Land Registry.
  • If the new lease is granted under the statutory lease extension procedure then your lender (if any) will not normally need to execute any documentation.
  • You have a period of four months from the date that both the terms of the lease document and premium have been agreed in which to complete the lease extension.
  • Landlord Development Right and Breaking the Lease

    The landlord is entitled to require that the new lease include a right to break the lease on two occasions:

    In the last 12 months of what would have been the original term of your lease
    At any time before five years from the end of the new lease term.

    The landlord can only break the lease on the grounds of redevelopment. To prove that ground the landlord would have to show at the relevant time that he intended to demolish or reconstruct or to carry out substantial works he could not reasonably do so without obtaining possession of your flat.

    If the landlord did manage to prove redevelopment grounds, then you would be entitled to compensation based on the market value of your flat, if sold on the open market at that time.

    Withdrawing from the Lease Extension Process

    At any time, before completing the new lease or entering into a contract for the grant of a new lease, you are able to withdraw from the process.

    However, you will not be able to apply for a new lease for 12 months from the date of such withdrawal and you will also have to pay both your own and the landlord’s legal and surveyor costs incurred to date.

    How Long Does The Lease Extension Process Take?

    A typical statutory lease extension will take between 4-12 months.

    Ashley Wilson Solicitors are also able to work with your timescales. If you need to complete the lease extension more urgently, for example, if you are selling your property, we will take steps to push the procedure forward.

    If on the other hand you are in no rush to complete the lease extension and need more time to save for the premium we are able to slow the process down. We will work with you to achieve your objectives.

    Can You Sell Your Property During The Lease Extension Process?

    You can sell your property during the process with the benefit of the Section 42 Notice. This would require you to serve the initial notice on the landlord between exchange and completion of the sale.

    On completion you would assign the benefit of the initial notice to your buyer. They would then step into your shoes to complete the lease extension.

    How Much Does A Lease Extension Cost?

    It is difficult to give an estimate of the cost of a lease extension. The cost will be based on the following:

  • The premium
  • Your valuer’s fees
  • Landlord’s costs
  • Your own legal costs
  • Arrears of ground rent and service charge
  • For more information on how much your lease extension could cost, contact us today to discuss your lease extension.

    Ashley Wilson – Lease Extension Experts

    We hope this lease extension guide was helpful to you in beginning your journey of extending your lease. Ashley Wilson Solicitors are specialists in right to manage, collective enfranchisement and lease extensions.

    We are always happy to offer a no obligation telephone call or meeting to discuss the process with you in more detail and answer your queries.

    Please contact Joanna Botley (020 7590 9318 or jbotley@ashleywilson.co.uk) or Jade Wilson (020 7802 4812 or jwilson@ashleywilson.co.uk) who will be able to assist you throughout the process.

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