A lease gives you the legal right to use a property for a period of time. As the lease gets shorter, its value decreases. The shorter it gets, the more it costs to extend.
It can be a challenge to sell a leasehold property with a short lease because the buyer is paying to use the place for a very short time. And mortgage lenders don’t like to make loans on short leases of 70 years or less for the same reason. That’s why it makes sense to increase the term of your lease while it’s still good and healthy, rather than wait until you’re at crisis point with only a few years left.
At the same time, the lease extension process is extremely tricky and can take as long or longer than buying a property in the first place, as well as potentially costing you a fortune. As a landlord, tenant or property owner, are you thinking about extending your lease? If so, don’t attempt to do it yourself. Here’s some expert advice from us, a group of professionals who are highly experienced in bringing about successful lease extensions.
About leasehold extensions
While a freehold means infinite ownership, a leasehold means ownership for a defined number of years. That’s why a lease is known as a ‘depreciating asset’. The Leasehold Reform, Housing and Urban Development Act 1993 lets leaseholders extend their lease by as much as 90 years as long as they meet certain criteria, something known as a statutory lease extension.
There are 9 steps to a basic leasehold extension:
- Check the term of years left on your lease. Even if it’s more than 80 years, it’s worth extending your lease and get an extra 90 years added on, as well as reducing the ground rent to next to nothing
- Contact someone like us, a firm that specialises in Leasehold Enfranchisement, and your solicitor, who will investigate whether you qualify. We, as your surveyor, will let you know the likely cost for extending your lease
- Your solicitor prepares a section 42 Notice to get things started. Let them have your latest ground rent and service charge demands, and details of your managing agent if there is one
- A landlord will probably ask for a statutory deposit once the notice is served. It’s usually 10% of the premium in your initial notice or £250, whichever is the most
- The landlord’s surveyor will probably want to inspect the property for their own valuation report. If there are tenants in the property it’s polite to give them a reasonable amount of notice
- Two months after the section 42 Notice is served you’ll get a Counter Notice from the landlord. If you don’t get one, the extension will be granted on the terms you’ve set out in your notice
- Once you’ve got the Counter Notice through your surveyor will begin negotiations. There is a two month statutory period for the surveyors to reach an agreement
- When the Premium has been agreed your solicitors will agree the the new lease and complete the extension. Now you have four months to complete the lease extension, a strict deadline. If you don’t meet it, everyone will assume you no longer ant to extend the lease
- Finally, you’ll get a completion date for the lease extension. The property register at the Land Registry will be amended and that’s that
Why choose us?
We carry out valuations for lease extensions and reforms throughout London and right across the South East of England. We are experienced in preparing Proofs of Evidence and giving evidence at Tribunal for freeholders and Leaseholders. Our valuers are all properly registered by the Royal Institution of Chartered Surveyors. And we have a great deal of experience with leasehold reform valuation, advising people under the original Leasehold Reform Act 1967 right through to the latest iteration of the Leasehold Reform Housing and Urban Development Act 1993.
We also handle collective enfranchisement for freeholders plus Section 5 valuations
Collective Enfranchisement enables the lease holders to acquire their freehold interest. We can produce a valuation report examining the freehold interest and advising on the likely price, the qualification criteria and the options open to those who wish to participate. We also handle Section 5 valuations, required when selling a freehold with under-leases.