What is a lease extension?
If you have come to this website, we expect you will have some idea what a residential lease extension is. You will also have been on some other helpful government websites including https://www.lease-advice.org/ for further information. Having spent an hour reading about the process you are now well and truly confused.
We have decided to keep our description and information as straight forward and plain speaking as possible. Although it can be a complex process, it doesn’t need to be.
If you own a leasehold flat either to live in or rent out, you have a right to extend this lease by ninety years. You may have purchased the flat ten years ago when it had 100 years remaining on the lease, today it has ninety years remaining. If you extend the lease today, you will have a 180-year lease. You are not requesting a lease extension from the freeholder of the property. You are telling them.
Why Extend Your Lease
There are several reasons why you should extend your lease. As your lease gets shorter, the property becomes less valuable. By extending the lease you are protecting and even improving the value of a flat. Many Olden Property Consulting client’s contact us to undertake the valuation for a lease extension when they have put their property on the market for sale. A shorter lease makes it more difficult to sell a flat and from a purchaser’s point of view it makes it more difficult (sometimes impossible) to get a mortgage to purchase the flat. Extending a lease makes the property easier to sell and easier to get a mortgage from a bank to purchase.
How to Extend Your Lease
A detailed guide can be found by clicking on this Lease Extension Information Sheet. If you qualify the process should be straight forward. Firstly, instruct Olden Property Consulting to undertake a valuation on your behalf. This valuation will set out the amount you should expect to pay for a lease extension. A solicitor will write to your freeholder (serve a statutory notice) which will include the amount Olden Property Consulting recommend in the valuation report. It is then likely that the freeholder will instruct their own surveyor to undertake a valuation in order to make a counteroffer. We would expect then to negotiate a settlement quite quickly for the lease extension. If this was not possible to reach a reasonable settlement with the freeholder, you have the right to make a reference to a dedicated property tribunal to resolve any differences. Olden Property Consulting would act as independent experts in this process.
Before you begin the process, you need to ensure you qualify, a qualification criterion can be found here Lease Extension Qualification Criteria Guide. If you are unsure whether you qualify please contact us and we will advise.
Why Use Olden Property Consulting
When you look on-line for information about the lease extension process you are hit with a tsunami of information and you end up reading and half knowing an awful lot more than you need thereafter becoming unnecessarily confused. We have purposely kept the description above as straight forward as possible. This is also how we advise our clients once instructed. We aim to avoid jargon to ensure our clients are comfortable from the outset with regards to the lease extension process and the likely costs involved.
Cost of a Lease Extension
The price you pay to extend your lease is known as the premium. The premium is made up of two or three elements, namely compensation for ground rent, compensation for the fact that the freeholder will now ‘receive’ the flat ninety years later as a result of the extension and finally the highly controversial ‘marriage value’. The overall value of the Property will increase as a result of the lease extension. If your lease has less than eighty years left when you apply for the lease extension, 50% of this increase in value is payable to the Freeholder. This is an important point; it is a lot cheaper to extend your lease when you have eighty or more years remaining. Please read this blog Avoid Root Canal – Extend Your Lease, then check your lease!
If you would like to estimate the potential cost to extend your lease you can use this lease extension calculator provided by the government https://www.lease-advice.org/calculator/ .