How to Extend a Lease– Unless you have purchased the freehold of your building, your flat will be subject to a lease granted by the freeholder. A lease basically means the right to occupy a certain property (usually a flat) for a period of time. The lease will also specify the communal areas of the building you may use and any other facilities at the property you may use ( such as the garden, parking space etc.)
New leases are usually granted for terms of 99 or 125 years, if you are buying a flat from someone other than the freeholder, the term of the lease will be disclosed at the time of sale and is likely to be less than the above. All you are purchasing is the right to occupy a particular space for a set period of time, at the end of the lease period, you can stay on as a tenant, but the freeholder will own your property. As leases have a direct bearing on the value of property it is important, they are not allowed to run down. Leases over 100 years or more, are generally considered to offer similar protection and value as freeholder property.
If the lease on your property has less than 80 years to run you should consider topping it up, you may find it harder to sell a property where the lease has been allowed to run down. The good news is, that providing you have lived in the property for a period of in excess of 2 years, you will be entitled to an additional 90 year lease at a zero additional ground rent. That doesn’t mean the extension will be free, it wont and a property professional ( usually a surveyor) will have to help you with the negotiations. Extended you lease you add value to your property.
The freeholder of the property may refuse to grant a lease extension for any of the following reasons. – The majority of the other leaseholders in the building have applied to purchase the freehold.
– Your lease has already expired.
– You have sublet your home on a lease of at least 21 years
– The original lease on your flat was for a period of less than 21 years
If you flat is owned by the National Trust, or a chartable housing trust or the Crown, you may experience additional difficulties with regard to a lease extension.
The purchase process will take between 1 & 6 months and you will need to employ the services of a solicitor and a surveyor. The surveyor will value the property so as the cost of the lease extension can be calculated, if the landlord does not agree with the valuation put forward by your surveyor, he will also represent you at the Leasehold Valuation Tribunal. (The Leasehold Valuation Tribunal (“LVT”) is the formal name given to the body appointed to make decisions on various types of dispute relating to residential leasehold property. The LVT is an independent decision making body which is completely unconnected to the parties involved or any other public agency. Following an approach, they will help settle the dispute.
Once the surveyor has prepared a report, your solicitor will draw up the necessary paperwork for the application which is served on the landlord, he will handle all aspects of the lease conveyance for you. For most people, the main consideration, is how much it will all cost, each case will differ, but there are usually, there main amounts in the calculation. The first two amounts are designed to compensate the landlord for loss of ground rent during the remainder of the existing term of the lease, and for not receiving possession of the property at the end of the term ( which will of course be at a much later date once the new lease is granted)
Thirdly, where the lease has less than 80 years to go, there is what’s known as a ‘marriage value’, which is arrived at by deducting the value of the property before the extension from the value afterwards, plus the value of the landlord’s interest. The real crux of the matter, is how long the lease has left to run, the closer to expiry date, the more money the extension is likely to cost. As well as the extension cost, you,as the leaseholder will be liable for both parties’ legal and valuation costs. If the matter ends up at the LVT,, they may apportion the costs differen
If you require a quote on your flat , contact Assetsure and we will be pleased to assit you.