When you own a leasehold flat, you own that property for a fixed period of years only. As time passes, the term remaining on the lease reduces and with it the value of your property. If your lease is short (in some cases less than 80 years) you can have difficulty selling or mortgaging the property. To avoid this you can extend the term of your lease.
Clarke Mairs has extensive knowledge and expertise in extending leases and can guide you through the whole process – from valuation to completion – providing clear advice at each stage.
In addition, some useful independent guidance on leases and the lease extension process can be found at https://www.lease-advice.org/ and http://www.moneysavingexpert.com/mortgages/extend-your-lease.
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For further information about the lease extension process and a detailed quotation please complete the contact form below. A quotation will be automatically emailed to you within a few minutes. Alternatively, contact Katy Rushworth directly on 0191 245 4725 or firstname.lastname@example.org
Information on the lease extension process
There are two routes which may be followed to extend your lease:-
Voluntary Lease Extension
You approach your landlord and ask them to grant you a lease extension. It’s entirely up to your landlord whether they are prepared to do so or not. Many landlords will make a reasonable offer and so it’s usually worth asking but if they choose not to you can’t force them (under the voluntary route).
If you can agree terms with your landlord, a voluntary lease extension is usually quite straight forward and so it can be completed more quickly and the legal costs are usually considerably lower.
Statutory Right to a Lease Extension
The Leasehold Reform, Housing and Urban Development Act 1993 was brought in to give the owners of flats the right to extend their lease at a reasonable price. Under this legislation, provided you satisfy certain criteria, you can force your landlord to an extension of 90 years on top of the term remaining on your lease at a peppercorn (nil) ground rent.
To exercise this statutory right you need to follow a strict legal process and so it tends to be considerably more time consuming and the legal fees are higher. Using solicitors experienced in this area can make the process as quick and cost effective as possible.
Frequently Asked Questions
Why should I extend my lease?
The main reason is to protect your investment – as the lease term shortens the value of your flat reduces. In extreme cases, eventually the lease will run out and you won’t have anything to sell. In less dramatic situations the lease may get so short it’s difficult or impossible to sell – most mortgage companies require a minimum term in the region of 70 years left on a lease before they will lend. Therefore, even with 60 years or more remaining, you might still struggle to sell a flat to someone who needs a mortgage to buy it. Cash buyers will know you’re stuck and expect to pay a reduced price.
When should I extend my lease?
As soon as possible and wherever possible before the term drops below 80 years.
Where there are less than 80 years remaining on the term of a lease “marriage value” is added into the calculation of the premium you need to pay to extend your lease. The shorter the term remaining on the lease, the more expensive the lease extension becomes. If your lease has a term of 80 years or less remaining then we would advise you to commence the process for extending your lease as soon as possible. This will stop time running for the purposes of calculating the premium you will need to pay for the lease extension.
If your lease is approaching 80 years remaining, let us know as soon as possible so we can ensure a Claim Notice is served before the terms drops below 80 years.
How much will a lease extension cost me?
You will need to pay to the Landlord a “premium” for the lease extension. Essentially that is the purchase price for the extra term on the lease. The sooner you obtain a lease extension the lower this premium should be.
In most cases you will also need to pay your Landlord’s costs. If you agree terms voluntarily with your landlord they will usually agree a fixed price for those costs at the outset. If you serve a formal Claim Notice under the statutory right you have, then you must pay your landlord’s reasonable costs of:-
- Your landlord (or their solicitors) investigating your right to a lease extension;
- Your landlord obtaining their own valuation report; and
- Preparing and completing the new lease.
You do not pay your Landlord’s costs of negotiating the premium and terms of the lease extension.
In addition you’ll need to pay your own solicitor’s and valuer’s costs.
Do I need a Valuation?
The only way to obtain accurate advice as to the amount you should pay for a lease extension is to obtain a valuation from a valuer with experience in this area of work.
We can provide details of valuers we’ve worked with and would recommend. Alternatively you can search local valuers to you here http://directory.lease-advice.org/ or http://www.alep.org.uk/find-a-practitioner.
There are various online calculators which will give you an indication of what the premium should be for your lease extension. However, they are not specific to your property and so may not be accurate, particularly with short leases or high value properties.
I had my flat valued to sell it recently. Do I need another valuation for lease extension?
Yes – it is specifically how much you should pay as a premium for the lease extension that needs to be valued. This is different to the sale price.
I have paid for my Landlord to carry out a valuation. Why do I need another one?
Any valuation your landlord carries out will almost always be for their purposes – and may reflect the price the landlord wants rather than a true valuation. It’s unlikely they will let you have a copy of it but even if they do, it has been prepared for them and so you should be reluctant to rely on it as being accurate advice for you.
Even after you’ve paid your landlord for a valuation there’s no guarantee they will have a professional valuation carried out or that they will make a reasonable offer to you. If they don’t and you have to serve a statutory notice, it’s likely they’ll have a separate valuation carried out and you’ll need to pay for that as well.
Does it matter that Clarke Mairs is not local to me or the property?
No – We act for people all over the country and abroad without any difficulty. Most communication takes place by phone and email and most documents can be emailed or posted to you.