November 7th, 2023 Lease Extension Update – the King’s Speech revealed the government’s intention to introduce new legislation in this Parliament. The proposed changes include:
• the elimination of the 2-year property ownership requirement for leaseholders seeking to extend their lease and
• an increase in the standard statutory lease extension term from 90 years to 990 years.
However, although there was no direct mention of the government’s previous pledge to abolish “marriage value” in the King’s Speech, Housing Minister Rachel Maclean did subsequently state when the issue was raised that “marriage value will be abolished“.
Lease extensions – your rights
Were you aware there is legislation giving owners of leasehold flats and houses the right to increase the value of their property by extending their lease? Our lease extension solicitors specialise in leasehold enfranchisement and lease extensions both for clients locally in Wiltshire, Hampshire, Somerset, Dorset and Berkshire and throughout England and Wales.
Extending leases and the freehold purchase of houses and blocks is all they do – our five strong team is one of the most specialist anywhere in the country.
Got a lease extension question? Call our specialist solicitors on FREEPHONE 0800 1404544 for FREE initial phone advice – with no strings attached.
We have over 25 years experience and deal with up to 500 leasehold extension and enfranchisement cases every year. Very few other law firms come anywhere near to matching that. But you don’t need to just take our word for it. Although there are 10,000 law firms in England and Wales:
1. We are the sole partners of The HomeOwners Alliance – we are the only solicitors recommended for lease extension advice by the only organisation to champion, support and serve Britain’s 17 million homeowners.
2. We are Progressive Approved Solicitors – one of just three law firms nationwide recommended and formally approved by Progressive Property – the UK’s largest property investment education company.
We are also members of ALEP (the Association of Leasehold Enfranchisement Practitioners) – the only specialist group for lease extension and enfranchisement surveyors and solicitors. So whether you are looking for a formal or informal lease extension, our expert team can help you.
Click here to read some reviews of our lease extension solicitors from satisfied clients
Why do I need a Lease Extension?
A short lease can really undermine your ability to sell your flat for a decent price – and now is the best time for your lease extension.
- Since the last recession, many mortgage companies have amended their lending policies and increased the minimum lease term they are prepared to lend against. This means it has got much harder to get a mortgage on leases with even as many as 70 years left.
Click here for roundup of how many of the leading lenders approach mortgage lending on short leasehold properties
- An extended lease makes your property much easier to market and sell.
- Your lease is a diminishing asset – the term drops daily regardless of a good or bad economic climate. Not only is the value of your property dropping as the remaining lease term gets shorter, if you don’t extend your lease then when the lease ends, you will either have to move out, or take the low-security option of trying to negotiate a rent from your freeholder.
- The cost of your lease extension is partly set by the value of your flat when you come to extend your lease. That means while your property value continues to rise, your lease extension is becoming more and more pricey.
- A lease with 80 years or less remaining is increasingly expensive to extend as the freeholder is able to charge an additional premium – which is known as the “Marriage Value”. This additional charge applies when you come to exercise your lease extension rights.
How our Specialist Leasehold Extension Solicitors can help
In addition to leasehold extension, our leasehold team regularly advise leaseholders and freeholders alike on a range of similar specialist subjects including:
- Claims for lease enfranchisement (also called collective enfranchisement) which is the right for tenants to join together (under the Leasehold Reform Act 1993) to exercise their right to buy the freehold of their block of flats.
Click here to read more about lease enfranchisement
- Grant of new leases
- Deeds of variation
- Solving problems caused by absent freeholders.
Click here to find out more about Vesting Orders and missing freeholders
- Tyneside flats – we regularly represent clients in extending so-called “criss-cross” or “crossover leases”.
Click here to find out more about Tyneside flats lease extension
Our solicitors are highly experienced in this specialised area – with over 25 years experience in dealing with up to 450 leasehold extension and enfranchisement cases every year.
Who do we represent?
Our specialist Leasehold Extension Solicitors represent individual leaseholders as well as property management companies, landlords and residents associations, providing jargon-free legal services and practical legal advice. So whether you are looking to extend the lease on your ex council flat or a central London mansion apartment – or whether you’re a portfolio landlord or ground rent company – we can help.
We offer a FREE initial telephone consultation.
Although we’re always happy to meet you, most of our nationwide lease extension and enfranchisement clients deal with us by e-mail, phone and Zoom video, avoiding the necessity of meeting face to face. Although our local clients are more than welcome to visit us at one of our local four offices – Salisbury, Andover, Fordingbridge and Amesbury. So wherever you live in England and Wales, for legal advice from specialist Lease Extension Solicitors, contact us today.
How do we get started?
Once you have appointed us to deal with your lease extension, the next stage is usually to appoint a specialist chartered surveyor to value the planned Leasehold Extension. You need to ensure you’ve appointed someone specialising in extending leases.
Our team also regularly work with surveyors who specialise in Leasehold Extensions and Freehold Enfranchisement cases and can assist you select the right one from our specialist surveyor panel.
Click here to read more about the importance of appointing the specialist lease extension surveyor.
Click here to find out more about How To Extend a Lease – the lease extension process
Lease extension – acting for freeholders
Freeholders as well as flat-owners will need expert legal advice when it comes to the lease extension process and our leasehold reform specialists have extensive experience in protecting the interests of freeholders.
Statutory lease extension
If you, as the freeholder, receive a formal request for statutory lease extension, you’re going to need specialist legal advice for the following reasons:
• It is important to check that the statutory notice is legitimate and whether you are compelled to grant the extension, or whether you can refuse to extend the lease.
• The premium stated in the notice may not be big enough – in which case you will need a solicitor to issue a counter notice demanding a higher premium.
• You will have to negotiate this premium if it leads to a dispute.
• You will need to comply with both the timetable and complicated procedure involved in finalising any lease extension.
As there are time limits involved in the lease extension process, it’s really important that you get specialist legal advice at the earliest opportunity.
Non-statutory lease extension
If a leaseholder informally asks for a lease extension you are not required to negotiate or even respond. However, our specialist lease extension team can help you negotiate a better deal – perhaps a higher premium, better ground rent terms and we can also help you negotiate and grant a lease shorter than the statutory 90 year period.
Click here to read more about the difference between private and statutory lease extensions
Sale of the freehold
We can also help freeholders when they are approached by leaseholders looking at buying their share of the freehold, a process that is sometimes referred to as ‘freehold purchase’, ‘collective enfranchisement’ or ‘lease enfranchisement’.
Your lease extension – dealing with a freeholder who simply won’t cooperate
A Vesting Order is an Order made by the County Court. And it’s useful with regard to both lease extensions. These orders are used in a couple of scenarios, mainly either whereby the Freeholder to your property is refusing to comply with their statutory obligations (in respect of an ongoing Claim for a lease extension or freehold acquisition) or whereby the Freeholder simply cannot be traced for your property.
So how does it work?
· If the Freeholder is indeed traceable, we will need to liaise with them in respect of either a Claim for a lease extension (or freehold purchase) ;
· However, the Leasehold Reform Housing and Urban Development Act 1993 and the Leasehold Reform Act 1967 require the Freeholder to keep to a strict timetable (such as responding to our original Notice of Claim on time) ;
· If the Freeholder however simply doesn’t play ball, we can threaten to apply for, or if necessary, actually apply for a Vesting Order from the County Court to force the Freeholder to cooperate with your application ;
· One particular scenario in which this would occur is if the Freeholder doesn’t serve a counter-notice by the deadline required by the initial s42 Notice of Claim
· And if the Freeholder continues to stall or fails to respond to all, then we can apply to the County Court for a Vesting Order, which if granted will order the Freeholder to grant the lease extension on the terms set out in your notice of Claim ;
· The threat of a Vesting Order alone is usually enough to bring an uncooperative freeholder to heel. That’s because if you do get your vesting order, the premium you need to pay to extend your lease will be set at the level contained in your own initial notice – i.e. the Freeholder effectively loses their right to try and negotiate the premium payable, which is highly likely to result in a lower premium for you to pay
An Application to the County Court for a Vesting Order can also be made if the Freeholder fails to complete the transaction within the period of time set out in the legislation. If granted in these circumstances, the County Court effectively forces the Freeholder to complete within a period of time.
Even fewer law firms handle vesting orders regularly than routinely deal with lease extensions. Our specialist property litigators, working closely with the lease extension team, deal with vesting orders on a routine basis
My lease extension – How can I find out how much time is left on my lease?
In order to work out how much longer remains on your lease term, check the dates of the leasehold agreement carefully. For example, if the agreement states that the lease commences from 1996 and it is 99 years long, then it will expire in 2095, therefore from the date this page was last updated (2023), you have just 72 years left.
Does lease extension need two years ownership?
In principle, the answer is yes – you will need to have owned the flat for a minimum of two years before you get a legal right to obtain a leasehold extension – although a voluntary or informal lease extension is available any time if your freeholder is willing to negotiate.
However, there is a way of getting round this two year ownership rule [under the 1993 Leasehold Reform, Housing and Urban Development Act] – if the person selling their flat to you cooperates.
Before actually selling the flat, the vendor will need to serve a formal Notice of Claim – provided they have owned the property themselves for at least two years.
As a result you will not have to wait two years before being able to extend the lease, as long as this notice is served before the sales process has been legally completed and the benefit of the Notice of Claim is properly assigned to you on completion of your purchase.
Our team can manage all of this for you – and although you can use your own solicitor for the purchase, it’s normally quicker and easier if we deal with the conveyancing as well.
Extending your leasehold in this way is a highly effective and low cost way to increase the value of your newly acquired flat.
What happens when my lease expires?
When the term of your lease runs out, your flat or house will simply return to the ownership of your freehold property.
So, in short, you no longer own the property in any way. And in addition you will have lost your automatic right to extend your lease or to join together with other leaseholders in buying the freehold.
That’s why it’s so important to make sure that you do extend your lease before it’s too late.
8 Common Lease Extension Mistakes You Need to Avoid
If you are a flat owner who does understand the legal right to extend your lease and are thinking about taking that step at some point in the future, there are some key mistakes which you should do your best to avoid. Each of them are quite likely to increase the cost of extending your lease.
1. Falling into the 80 year trap
The first serious mistake is putting off applying for a lease extension and allowing the term remaining on the lease to drop through the milestone of 80 years remaining.
Why is this date so important? Well, on the exact day which your lease passes the 80 year mark, your freeholder can then charge you an extra fee known as the “marriage value”. Even if your property is reasonably priced, this marriage value can add several thousands of pounds onto the cost of the lease extension. Therefore it is really important to extend your lease well in advance of that 80 year mark.
2. Not getting a proper lease extension valuation
It may be tempting to cut corners and save some cash by doing without a formal lease extension valuation. But if you don’t employ your own lease extension surveyor to value your lease extension, you’ll be relying on the valuation produced by your freeholder’s own surveyor – which may will be significantly more expensive.
Don’t be tempted either by a cheaper “desktop valuation” – one done in an office, using paperwork and documents supplied to the valuer and without a physical examination of your flat. This type of valuation is probably cheaper but it won’t take account of the condition of your property.
Also make sure that your surveyor is a genuine specialist who deals with this kind of valuation work regularly. There are surprisingly few surveyors who carry out this work to a high standard – but don’t worry, we have an informal panel of specialist surveyors who we use regularly, and we are happy to appoint one of them on your behalf as part of our one-stop shop service.
On a similar subject, never rely on one of the automatic online lease extension calculators. These can be quite useful in giving you a very, very rough initial idea of the kind of premium you might have to fork out – but should never be relied on when it comes to negotiating the premium you’re actually going to have to pay your freeholder.
3. Understand the risks of an informal lease extension agreement
Even if you have a good relationship with your freeholder, you need to be aware of the risks in agreeing to a voluntary lease extension.
An informal agreement gives you no fallback protection and means you could fall victim to an unscrupulous freeholder. It can work perfectly well – but your freeholder is in control.
Many freeholders have been known to agree a price to extend the lease informally, only to drag things out and then refuse to agree to a voluntary lease extension. There is nothing you can do about that, and it means that you will have to start the formal process from the beginning. There is a particular danger if the remaining term of your lease is approaching 80 years.
In this case, if your freeholder can drag the process out until the term left on the lease drops down to 79 years and 364 days, he can then force you to pay the “marriage value” – see above. And that can cost you thousands of pounds.
4. Letting your lease term drop below 80 Years
When your lease gets anywhere near the 80 year point, remaining, we strongly suggest you start the process of extending your lease – and make sure that you use the statutory rather than the informal route. The reason for that is simple. The moment your remaining lease term drops below 80 years, the cost of extending it suddenly increases drastically. That’s because at that stage your freeholder is entitled to charge you an additional payment known as ‘marriage value’.
But, as soon as your former lease extension application goes in, your lease effectively freezes – so provided you keep to the statutory deadline, you can increase your lease before it drops below 80 years and before that significant additional payment becomes due.
5. Missing a deadline in a formal lease extension application
If you fail to meet the deadline for an extension of your lease, it could have very costly consequences – your claim may be “deemed withdrawn” and you will be required to wait a year from the date of withdrawal in order to make a new claim. Additionally, you are liable for not only your own wasted legal and valuation costs, but for both the “reasonable” legal and valuation fees incurred by your freeholder, which could add up to thousands of pounds. Therefore, it is important to ensure that all steps of your lease extension are completed properly and on time. And that’s why you need a specialist solicitor with plenty of experience in this area..
6. Paying too much for the lease extension
Every day which you put off contacting a specialised solicitor about your lease extension, it is costing your money. Given that part of the price of the lease extension is based on the market value of your property, at a time when house prices are rising, you are going to have to pay more to extend the lease with each week or month you delay.
7. A DIY lease extension
Don’t even consider trying to manage the legal lease extension process by yourself. We have enough problems working with experienced conveyancing solicitors on the other side who regularly struggle to get the procedure right and regularly make mistakes!
8. Failing to plan in advance
Leaving things to the last minute is always going to make a lease extension more expensive. Doing things well in advance is going to result in less stress, and probably less expense too. Remember that there are two main factors which increase the cost of extending your lease – the length of the term and the value of your property. So if your property is gaining in value and the lease term is dropping the price you need to pay is going up on two fronts.
The procedure extending a lease can be tricky, and keeping tight deadlines is essential, as mentioned above. Don’t just choose the first property solicitor you come across either. Take time to find one of the relatively few really experienced lease extension solicitors – even if that means you have to deal with them by phone or email rather than in person.
Most solicitors who cover conveyancing and property law work rarely deal with a lease extension. Many have never dealt with one at all.
Over the years we have come across plenty of horror stories – on one occasion, a leaseholder rang us up for advice and said her own solicitor had told her to call us to find out what to do because he had never done a lease extension before! Honestly!
Lease extensions – how big is the market?
Many people don’t realise how huge the lease extension market is – but recent figures from the Office of National Statistics should help to make it clear. There are 22.5 million homes in England and Wales of which a fifth are flats. as a result the UK government estimates that there are approximately 4.5 million leasehold flats and houses which are all going to require a lease extension at some stage.
Do lease extension rights apply to my ex-Council flat?
Yes, the same rules apply. So you have the legal right to extend the lease on an ex- council flat by 90 years in the normal way.