If you own a flat each day, week, month and year that passes the length of your lease will become shorter and as a consequence the value of your flat will diminish. If you do nothing at all, when your lease term expires the ownership of your flat will pass back to your freeholder.
If you have owned your flat for two years you can force your freeholder to extend your lease and increase the value of your flat.
By exercising your statutory right your freeholder will be forced to grant you a lease extension of 90 years i.e. 90 years will be added to the end of your existing lease term and if you pay ground rent this will be reduced to a peppercorn (i.e. nil).
Is there a cost for a lease extension?
You will pay a premium to your freeholder for the cost of a lease extension and will need to instruct a specialist valuer at the start of the process to advise you of the expected premium. We are able to assist by recommending a valuer who specialises in this field.
When to extend your lease
Even if you have an unexpired term of over 100 years you should start considering the option of extending your lease. A longer lease will be less expensive to extend.
The general rule is that, if your lease has less than 90 years remaining you must start to think about extending it. If your lease has just over 80 years unexpired, you need to act very urgently before the unexpired term falls under 80 years which is when marriage value will become payable. Marriage value is an additional premium payable to your freeholder which makes the lease extension considerably more expensive.
Once your lease has less than 80 years remaining the cost of extending will continue to become considerably more expensive. If your flat has a lease term of less than 70 years remaining your flat is likely to become difficult to both mortgage and sell. Our solicitors are able to provide advice on the costs associated with a lease extension and the difficulties that may arise in more detail if required.
Buying or selling a short lease
The majority of people only start to consider a lease extension at the time of purchasing a flat or selling and the length of the lease becomes a very important factor. If it is too short then mortgage lenders may not be willing to offer a mortgage and purchasers will be put off or only proceed at a reduced price.
Few flat owners know that (if they have owned their flats for two years) the right to extend can be transferred to their buyer. Therefore the sale and conveyancing process is not delayed. Please contact us for more information before you sell.
On occasions flat owners are able to agree terms informally with their freeholder, however, it is more usually to follow the statutory process.
At the start of the process you will need to appoint a specialist solicitor and a valuer in this field. The legislation and process are full of complexities that some general property solicitors and valuers are not aware of. It is therefore very important that you appoint specialists. Being caught within the traps of the legislation could result in an invalid claim with critical and expensive consequences for you.
Once you have appointed your solicitor and valuer then you will be able to commence the process. Please see our Lease Extension Flowchart and Lease Extension Procedure Guide for a detailed summary of the procedure involved in extending your lease.
How can we help
If you are considering extending your lease or buying or selling a property with a short lease we are able to help you.
We are experts in this field and also members of the Association of Leasehold Enfranchisement Practitioners (ALEP) (see article to the left). We understand the technicalities and all angles of the legislation and will provide you with the best advice to achieve your objectives. We will always work closely with your instructed valuer to ensure that you achieve the very best result saving you costs where possible.
For lease extension costs and an initial discussion regarding extending a lease and to discuss the options and procedures available to you please contact Joanna Botley (email@example.com / 0207 590 9318) or Jade Wilson (firstname.lastname@example.org / 020 7802 4812). Alternatively you can visit the contact us section for our office location.