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The Lease Extension ProcessHow To Extend a Lease. Image of block of leasehold flats

Solicitors Specialising in Leasehold Extension

When you come to extend your lease, you have 2 choices. A statutory or formal lease extension gives you the legal right to compel your freeholder to grant you an extra 90 years on top of your existing lease and at a zero ground rent (referred to as a “peppercorn rent”).

The other alternative is what is known as a voluntary or informal lease extension. There is no set process for this (but see below for more information).
Click here to read more about the difference between private and statutory lease extensions

How To Extend a Lease – the statutory route

To qualify for a formal lease extension you must satisfy the following 3 requirements:

  1. the original lease must have been granted for over 21 years,
  2. the lease should be for residential use and
  3. you must have owned the flat for a minimum of 2 years. You do not have to have been in occupation during these 2 years of ownership.

Note that general rules on leasehold extensions may not necessarily apply to government or National Trust owned properties.

Got a lease extension question? Call our specialist solicitors on FREEPHONE 0800 1404544 for FREE initial phone advice – with no strings attached.

The need for specialist solicitors

Extending a lease involves a complicated area of law. Unlike, say conveyancing, formal lease extensions have a strict timetable – and getting the timetable wrong means your application will fail, with potentially significant wasted legal and valuation costs as a result. The drafting the documentation, serving it correctly, negotiating the right premium are just 3 areas where it’s remarkably easy to make mistakes.How To Extend a Lease. ALEP logo. Assocaition of Leasehold Enfranchisement Practitioners

And although there are around 10,000 law firms in England and Wales, very few of them have solicitors specialising in this area. In contrast, we have over 25 years experience extending leases for clients nationwide. And our 5 strong specialist leasehold team handle up to 500 lease extension, right to manage and freehold purchase cases every year – and that number is growing.

In addition, we are members of ALEP – the only organisation for specialist leasehold lawyers, and are the only solicitors recommended lease extension work by the HomeOwners Association – the country’s largest organisation representing the interests of the U.K.’s homeowners.How To Extend a Lease. HomeOwners Alliance logo

If you’re thinking of instructing another solicitor, make sure they are genuine specialists. Ask them how many lease extensions they handle every year.

However you do instruct, make sure that you always ask for a quote for the legal work.

How much will extending the lease on my flat cost?

There are a number of different costs involved in any flat lease extension.

  • Firstly you will have to pay your freeholder a “premium” to extend your lease – see below
  • Secondly you will need to pay legal costs – both for your own solicitor and any solicitor appointed by your freeholder
  • Thirdly, if you decide to go ahead with a specialist valuation of your own, you will need to pay the costs of your surveyor – and the reasonable costs incurred by your freeholder in appointing their own specialist surveyor to value the lease extension.

Do I really need a surveyor to value my lease extension?

We strongly believe that you do. Your freeholder is almost certain to get a valuation and therefore they will know exactly how much your lease extension will cost. They may well ask for more than the valuation, or at least choose the top premium price on a range of valuation. Unless you have a good idea of what you should be paying, it’s very difficult to know when your freeholder is offering a fair price and when they’re trying to rip you off.

If you do decide to go ahead with a valuation, there are broadly two options. What is known as a desktop valuation is usually cheaper, because it does what it says on the tin. The surveyor will do the calculation from information they can find online – and will not actually visit your flat. This can lead to a less accurate valuation – because the condition and particular circumstances of your flat will affect the premium.

A desktop valuation therefore is much better than relying on an online calculator. However, it will not be as accurate as a proper physical inspection by a specialist surveyor.

Does my surveyor have to be a lease extension specialist?

The assessment of the premium required to extend the lease is based on a complicated legal formula. In our experience, the vast majority of surveyors, even if they are fully qualified chartered surveyors, struggle with these calculations, simply because they rarely come across them.

There are however a small number of surveyors nationwide who do this work on a regular basis. We have developed a nationwide unofficial panel of these specialist surveyors who we rely on to get the right price for your lease extension. We are happy to introduce you to 1 of the surveyors and if you prefer, to instruct them on your behalf as part of our one-stop shop service.

So to sum up, not getting a specialist valuation yourself (and one that is based on a physical examination of the flat at that) is risky. Our advice, don’t cut corners, it’s likely to cost you more in the long term.

Click here to read more about the importance of appointing a specialist lease extension surveyor.

How To Extend a Lease – the first legal steps

If you decide to go down the formal statutory route for a lease extension (which your freeholder cannot refuse) rather than the voluntary or informal route, then the first thing to do is to instruct an experienced leasehold extension solicitor.

Your solicitor will serve the appropriate legal notice on the freeholder informing them that you wish to extend the lease.

The formal process of extending a lease is subject to strict time scales. So you are best instructing a solicitor as soon as possible. Make sure that the solicitor you appoint as plenty of leasehold extension experience, because the vast majority of conveyancing solicitors simply don’t come across lease extensions very often.

The freeholder – time for a response

The freeholder will have 2 months in which, to reply to your leasehold extension notice.

This is the stage where you need to get your own valuation of the premium you need to pay. When instructing a surveyor, always get a fixed fee for the work. The fee should include an initial inspection of the property, reading the lease agreement documents and doing all relevant calculations.

What is a Counter Notice?

When the freeholder receives your extension notice they will usually serve a counter notice. This will either be ‘friendly’ therefore approving the extension or ‘hostile’ which opposes the extension.

In order for the freeholder to issue a hostile notice he must have a legally valid reason, which are only available on very limited grounds.

If this does occur, your solicitor will advise you further on how to proceed.

How To Extend a Lease – the Negotiation Period

However, usually the notice will be friendly and after this is received your solicitor will normally enter into negotiations with the freeholder solicitor.

Both parties will negotiate the terms of the extension and the amount of premium to be paid using the information provided by the surveyors appointed by both sides.

What happens if the freeholder simply doesn’t respond to my application?

If the freeholder refuses to respond to your notice, then you are also entitled to take the request for a lease extension before the County Court.

An lease extension completed in this way is usually awarded on the same terms as the original lease. Therefore this is not ideal if you want to renegotiate the leasehold terms, but you will normally find that the County Court will accept a lower premium than might have been expected from a commercially minded freeholder.

What happens in the case of a dispute with my freeholder?

When it comes to lease extensions, it is possible to apply to the First Tier Property Tribunal to resolve disagreements about any of the following:

1. The correct level of  your lease extension premium
2. Whether or not the legal and surveyors’ costs claimed by your freeholder is reasonable.

Fortunately only a very small percentage indeed of applications to extend the lease actually make it to the property tribunal. And 1 of the reasons for that is that, in general terms, parties are responsible for their own legal costs – which can be substantial.

Click here to read more about the role of the First-Tier Property Tribunal in Freeholder Leaseholder Disputes

How To Extend a Lease – Finalising Your Lease Extension

Once the freeholder receives your notice, you will be responsible for all of the costs associated with the extension i.e. the valuation fee and legal costs. The notice will also set a date for the extension.

If you are extending your lease using the formal or statutory route, then you are entitled to a full 90-year extension to the length of your current lease. paying no ground rent. You will still be responsible for any service charges as agreed under the original lease.

The main benefit of looking to extend your lease is the increase in value that it will bring to your property.

Because of the reluctance of many major lenders to offer mortgages on short lease flats, short leases can be hard to sell. So if you extend for a further 90 years your flat becomes much more appealing to a purchaser.
Click here for a summary of mortgage availability for short leases

How To Extend a Lease – the Informal Route

Negotiating an informal lease extension is entirely voluntary. If you choose this route, then you cannot force your freeholder to grant you a lease extension. That’s only possible if you use the formal or statutory route.

We usually recommend leaseholders use the formal route – because although the informal route does have its advantages, you are entirely reliant on the cooperation and goodwill of your freeholder. And that can be withdrawn at any stage, leaving you with wasted legal and valuation costs and potentially a bigger premium to pay if your property has increased in value in the meantime.

What’s more, your freeholder need not even acknowledge an informal request for lease extension, let alone negotiate a premium.

However, there are occasions when an informal lease extension may be more appropriate. One particularly good example of that is if you are strapped for cash and are not able to stump up the money for a full 90 year extension. In this case, a shorter lease extension, at a lower price might be appropriate – if your freeholder is willing to accept it.

And even if you choose the informal route, it is still important to seek specialist legal advice and a valuation of your own from an experienced surveyor.

Can Executors Apply for Lease Extensions?

In short, yes they can.

There are some restrictions though, and executors of an estate have the right to submit a formal notice of claim for an extension to a lease on a residential leasehold property within two years of probate being granted. The person who has died must have qualified for the extension in their own right, meaning that they must have owned the property for at least two years at the time of their death.

These rules mean that the executor has the option of going ahead and extend the lease themselves, or can start the process and then put the property on the market. As long as the notice of claim has been submitted, this can then be passed on to whoever buys the property rather than them having to wait the statutory two years before applying for a lease extension in their own right. Doing thing saves the potential purchasers money, and not only increases the value of the property but also its attractiveness to buyers.

Click here to read more about your lease extension.

Considering a Lease Extension? Make an enquiry with us today.

Our expert Lease Extension team have already helped thousands of people like you with their Lease Extension. We can help you too in extending your lease wherever you live in England and Wales.

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