As trusted lease extension experts, we work with our clients, valuing property and assisting with the complex process of lease extensions in London.
If you own a leasehold property, you may be aware that as the lease gets shorter, the property value decreases. While this does not necessarily pose a problem while living in your home, a short lease can be troublesome when you wish to sell. Buyers are often wary of short lease properties, and many mortgage companies will not lend against leases under 85 years. A lease extension reverses the inevitable drop in value, so that the full value of the property can be realised upon sale.
The Leasehold Reform, Housing and Urban Development Act (1993) gives owners of leasehold properties (typically flats and maisonettes) the right to extend their lease by 90 years, entitling them to:
At Peter Barry, our team of RICS Registered Valuers and Chartered Surveyors have extensive experience helping clients extend their lease. Over the years, we’ve carried out hundreds of leasehold valuations and negotiated lease extensions ranging from straightforward to adversarial cases and appearing at Tribunal.
If you wish to extend the lease of your property, you first need to establish if you are eligible under the legislation. The right to a statutory lease extension is subject to certain qualifying criteria. These include:
This entitlement is not valid if the freeholder is a charitable trust and the property is provided as part of the functions of the charity, or if the lease is a commercial lease.
If you are not eligible for a formal lease extension under the Act, you may be able to make an informal approach to the freeholder and negotiate a lease extension that way. However, please be advised that if you are choosing this route, you are not protected by the Act and your freeholder can refuse to grant a lease extension or impose unfavourable terms.
A lease extension is one of the most important investment decisions you can make to restore the value of your home, provide security and a good return on your capital. However, be aware that the longer you leave it until your lease extension, the more expensive it becomes.
A leasehold property is a depreciating asset, and as the term reduces, so does the property value. When the term reaches 80 years or less, it becomes much more difficult to obtain a conventional mortgage, meaning the property will be much harder to sell and can rapidly lose value.
What’s more, once the lease falls to 80 years or less, you will have to pay 50% of the ‘marriage value’ (the property value increase as a result of the lease extension), which can be a substantial amount and drive up the cost of any lease extension significantly.
If you are thinking of buying a leasehold property, we would advise you to be very careful about any property with less than 90 years remaining on the lease, to allow for plenty of headroom to fulfil the eligibility criteria for a statutory lease extension well before you become liable for marriage value.
The whole process to extend a lease typically takes 3-12 months. By choosing your professional advisers wisely, you can maximise the journey’s efficiency and minimise undue delays.
Estimate the likely costs of a lease extension under the Leasehold Reform, Housing and Urban Development Act 1993.
If you are applying to extend the lease of your property under the Leasehold Reform Housing & Urban Development Act 1993, it is your legal right to obtain a statutory lease extension provided the property and your ownership of it meet the qualifying criteria. If you have owned the property for 2+ years and it has a long lease, in the vast majority of cases you should be able to extend the lease.
If you are legally entitled, your freeholder cannot refuse. However, if they are being uncooperative or fail to respond when contacted, you can enforce your statutory right to a lease extension. Ask your solicitor to serve a Tenant’s Notice to start formal proceedings under the Act.
Commencing the statutory lease extension process starts with serving a Section 42 Notice on the landlord – but what do you do when you don’t know where the freeholder lives, and you’ve unsuccessfully tried to obtain their details via the property’s title summary at the Land Registry?
Before you can make an application for a Vesting Order from the county court, you need to prove that you’ve made all reasonable attempts to locate the missing freeholder. This includes placing two adverts in the local newspaper, hiring a search agent to find the freeholder, visiting the last known address of the freeholder, and checking probate records. You will then be required to get the premium determined at a First-tier Tribunal and the court can grant you a lease extension instead of the landlord.
If you choose to follow the statutory procedure, it will normally be necessary to instruct a solicitor to serve the notice, and your legal advisers may also become involved in the negotiations which can be lengthy and protracted.
If the property is mortgaged, your lender will need to agree to the lease extension. They will also insist on a Deed of Substitution to be signed, giving them security of the extended lease. Finally, the lease extension must be registered at the Land Registry, where the existing leasehold title will be closed and a new one opened in its place. This can take up to 6 months to complete.
Lease extensions can be a difficult process and we would always recommend that you get professional help from a solicitor and surveyor with extensive experience in this area.
Follow the links below to find out more about the lease extension process.
Our surveying team also answer questions submitted by the public on the Lease Extension Advice site