All leasehold properties have an expiry date, meaning the ownership of the property will revert back to the freehold owner once the lease term comes to an end. To prevent that from happening and losing your asset, keep track of your lease length and don’t let it get too low. The shorter the period left on the lease, the quicker the leasehold will diminish in value.
As a lessee, you will automatically have the right to extend your lease if you have owned your property for two years and you have a long lease (generally any lease in excess of 21 years). The most ideal way to secure your tenancy for a longer period would be to agree a leasehold extension, and the terms of that extension, directly with your landlord. If that is not possible, you have the option of exercising your statutory rights and making a formal lease extension application.
This does not have to be a daunting process and our team can support you throughout informal or formal lease negotiations. Regardless of the length of your property lease, you should be prepared to pay a fee to the freeholder, and to budget for any associated costs along the way. The price you may need to pay will differ, depending mainly on the length left on your lease when you choose to extend.
Leasehold properties, which are typically flats, will be worth more the longer the lease length is. Letting the lease fall below a term of 80 years can make selling the property extremely difficult or extending the lease considerably more expensive. This is because of the marriage value of a lease, which is the increase in the total value of a property following lease renewal.
Extending a lease once it has reached 80 years or less will incur a ‘marriage fee’. The leaseholder benefits from enjoying the property for a longer term, while the freeholder is disadvantaged. This increase in property value is split equally between the leaseholder and freeholder, meaning 50% of your increased property value will leave your hands as a marriage fee to the freeholder.
If you are considering extending your lease, talk to the property experts at QualitySolicitors. There are different ways to approach lease extension and we can represent both lessees and freeholders. We work with carefully selected industry professionals, including surveyors, mortgage lenders and specialist valuers, to ensure any deal is right for you.
Our property solicitors cover informal lease extensions (agreeing a deal with the freehold owner direct, or representing you if you also own the freehold title) and formal lease extensions (often a more lengthy process, but it offers greater protection and security). You will receive the highest level of advice and representation throughout negotiations and Leasehold Valuation Tribunals if necessary.
To extend your lease, call QualitySolicitors for practical and cost-effective advice on 08082747557.
A leaseholder needs to obtain consent from the freeholder before building an extension on a leasehold property. The leasehold agreement will normally specify the conditions under which a freeholder’s consent can be obtained, as well as the fees payable.
It is vital to understand the terms of a lease agreement before purchasing a property, as well as any planning restrictions.
Normally a leaseholder must have owned their property for at least two years before they can apply for a lease extension. In addition, the lease must have been originally granted for a term of over 21 years.
There are other conditions that may apply, so it is wise to seek legal advice.
It is usually cheaper to extend a lease than to buy the freehold. This depends on the length of time remaining on a lease, the value of the property and the terms of the leasehold extension or freehold purchase.
Most of the time, extending a lease is less expensive upfront than buying the freehold. However, in the long term, it may be more costly due to increased service charges and ground rent.
It is expected that the government will announce leasehold reform legislation in the 2023-2024 parliamentary season. The new legislation should give leaseholders more rights, including capping ground rent at 0.1% of the freehold value.
Any new legislation is likely to take a few years to come into force.
Under the Leasehold Reform, Housing and Urban Development Act 1993, a landlord cannot normally refuse a lease extension if the leaseholder meets eligibility criteria. However, there are exceptions. For example, if the landlord plans to redevelop the property or use it for a different purpose, they can refuse to extend the lease.
If the landlord refuses to extend the lease, they must serve a counter-notice within a specified timeframe. The counter-notice must state their grounds for refusal. If the leaseholder disagrees, they can appeal to the First-tier Tribunal (Property Chamber). Whether you are a leaseholder or a landlord, it is vital to seek professional advice so you follow the correct procedures.
