If you own a leasehold property, this will only be for a fixed period of time. The lease on the property acts as a legal agreement between you, the leaseholder, and the freeholder/landlord.
With a leasehold, you will own the property and have a right to live in it for the length of the lease agreement with the freeholder. You do not, however, own the land it is built on.
As the time left on the lease decreases, the value of the property will start to fall. If a lease is under 80 years, it can be very difficult to sell or remortgage. It is also important to note that, when a lease drops below 80 years, you will need to pay 50% of the property’s ‘marriage value’ to the freeholder.
To avoid this from happening, it is important that you understand your rights and options for extending an existing lease.
Here, we discuss various important matters concerning how to extend a lease, including how much it costs to extend a lease, when you should extend a lease and how much the process costs.
Am I legally entitled to extend a lease?
In certain cases, you will have a legal entitlement to extend the lease on a property.
To be eligible for a statutory lease extension, there are various conditions which must apply. These are:
- You have owned the lease for at least two years
- The lease was originally for a term of over 21 years
- The landlord must not be a charitable housing trust
- The property must not be for business or commercial use
When should I extend a lease?
Exactly when you should extend a lease will depend on various factors. As mentioned above, it is critical that you renew the lease before the time remaining drops below 80 years to avoid having to pay half of the property’s marriage value to the freeholder, and to protect the value of the property.
As a general rule, as soon as a property has 90 years or less left on the lease, you should immediately consider an extension.
How to extend the lease on a flat or other leasehold property
There may be a situation where you and the freeholder are able to come to a voluntary agreement regarding a lease extension. In these cases, the freeholder will accept the extension in exchange for a one-off payment.
This is often the most efficient and cost-effective method for extending a lease, but it of course depends on the cooperation of the freeholder. Negotiations can take place with the end result being a new lease agreement which both parties agree to.
If you qualify, you will be legally entitled to extend the lease by 90 years for a flat, or 50 years on a house, under the terms of the Leasehold Reform, Housing and Urban Development Act 1993. This is known as a statutory extension.
A formal Section 42 notice will be filed to the freeholder, who will then have two months to respond. They can either accept the extension and price, or contest the price. If the price is contested, either party can apply to the First Tier Tribunal to find a resolution.
How long does it take to extend a lease?
Under normal circumstances, a voluntary lease renewal should take around 6-12 weeks. Statutory renewals are likely to take much longer, between 6-12 months.
How long can you extend a lease for?
Under statutory lease extension, you can extend a lease for 90 years for a flat and 50 years for a house. With voluntary lease extensions, you can agree to extend the lease by any number of years.
How much does it cost to extend a lease?
The cost of extending a lease will depend on a number of factors, meaning that it is hard to provide an accurate estimate. This includes the property’s current value, the length of the existing lease and the ground rent.
The final cost for extending a lease will include the premium (the price agreed between you and the freeholder), as well as other professional fees and taxes, including legal fees.
For further information regarding the fees our solicitors charge for lease extensions, see our residential property pricing page.
Are there any alternatives to extending a lease?
If you do not want to extend the lease on the property, there are some alternative options which may be more suitable.
For example, you could consider:
- Lease enfranchisement – This is where you purchase the freehold on the property outright.
- Collective enfranchisement - In a block of flats, you and other leaseholders in the block decide to buy the freehold together.
How our leasehold solicitors can support you in extending a lease
At Henriques Griffiths, our team have substantial expertise with a range of leasehold property matters, including in relation to lease extensions.
Our team can guide you through the process of extending your lease, advising you on your rights and helping you with the negotiation process. We can ensure any queries you have are answered promptly and you are kept up to date with the progress of your transaction at all times.
As a firm, we are accredited by the Law Society’s Conveyancing Quality Scheme (CQS) reflecting the high standards of our residential property services, including for leasehold property.
Henriques Griffiths is Lexcel accredited by the Law Society for our practice management and client care.
We are regulated by the Solicitors Regulation Authority (SRA), providing assurance that we continually meet the highest legal and professional standards.
Contact our lease extension solicitors in Bristol today
Speak to one of our specialist lease extensions lawyers now by contacting your local Henriques Griffiths office in Bristol or Winterbourne, or you can use our simple enquiry form to ask a question or request a call back.