Lease Extensions – An Overview
The right to extend your lease
A qualifying tenant has a statutory right to extend their lease under the Leasehold Reform, Housing and Urban Development Act 1993 ‘the Act’. Generally speaking, you will be a qualifying tenant if you have owned your flat for at least 2 years. Under the Act you are entitled to an additional 90 years in addition to the remaining term at a nominal ground rent. For example if there are 95 years remaining on the existing lease you will be entitled to a new lease of 185 years in total.
Extending your lease
You can extend your lease informally by agreeing terms with the freeholder or, if the freeholder is unwilling to negotiate, then you can serve statutory notice under the Act. By serving notice this obligates the freeholder to grant a lease extension and it sets a time frame for the application process.
How much will a lease extension cost?
There is no set answer to this. It is usual for a qualified surveyor to carry out a valuation which will generally take in to consideration the market value of the flat, the remaining term left on the lease and the annual ground rent payable. In brief, the lower the remaining term left on the lease, the higher the premium payable so the sooner you act the better when it comes to lease extensions.
There are several advantages to extending your lease. Usually the flat value will diminish as the lease term gets shorter, so prompt attention to this could save you money when extending. It can also be difficult to secure funding for flats with lower lease lengths and, as a result, flats with lower leases can be less desirable to prospective purchasers.
Finally, if you are thinking about extending your lease then be aware that ‘marriage value’ is applicable for leases of 80 years or less, i.e. the extra value that a lease extension will add to your flat will be payable. It can be more expensive when it comes to extending a lease of this length so it is important to be conscious of the 80 year mark.
If you are thinking about extending your lease or if you have any conveyancing queries in general please do not hesitate to contact our property team.
Ben Gardner: firstname.lastname@example.org
Gary Green: email@example.com