What is a lease extension?
A lease extension is a legal document entered into between yourself and your landlord (the freeholder) which increases the term of the lease of your leasehold property.
Why extend the term of your lease?
Generally problems may be encountered once a lease has a period of 80 years or less to run.
It may be that you are having problems trying to sell your flat due to the length of the term remaining on your lease, or it may be that you wish to release some equity that you have in your property and this may be problematic if your lease term is too short.
Furthermore if a purchaser of your property needs a mortgage on your property the lease term remaining will need to be long enough for the lenders requirements otherwise the lender may be reluctant or unable to lend money to your purchaser on the basis of your existing lease.
Extending the term of the lease of your property will usually significantly increase the value of your property.
What is the law?
The leasehold reform housing and urban development act 1993 is legislation which provides an opportunity for a leaseholder to acquire an additional term of 90 years to be added to the existing term of his/her lease at a nominal annual rent in return for a capital payment to the landlord (the freeholder).
To qualify the original lease must have been for a term of more than 21 years and the present leaseholder must have owned the existing lease for at least the last 2 years.
A formal notice has to be served on the landlord requesting the extension of the lease (under the provisions of the 1993 act) before the landlord is obliged to consider the request for the extension of the lease.
If you qualify under the terms of the act you can ultimately oblige your landlord to grant you a lease extension of 90 years in addition to the current term of your lease, and to reduce the annual ground rent payable under the lease to a nominal sum, in return for a capital payment by you to your landlord.
The capital sum is either agreed between you and your landlord or failing agreement will be determined under the provisions of the legislation, and if the formal legal process is invoked you will be required to pay towards the landlords legal costs and surveyors costs.
What if I wish to sell my property before the arrangements for the lease extension are concluded?
Once an initial notice has been served on the landlord, the benefit of that notice may be assigned with the lease when the flat is sold.
This means that you can sell your flat with the benefit of the right to a lease extension.
The purchaser of your flat will be able to proceed with the application for the lease extension without having to meet a further 2 year ownership qualification referred to above.
Do all the leases in the building have to be extended at the same time?
The leases in the building can be extended on an individual basis and therefore there is no need or requirement for other owners in the building to extend their own lease(s) at the same time.
What if I do not qualify for a lease extension?
If you do not qualify under the act for a lease extension then although you cannot compel your landlord to extend your lease you can of course still try to negotiate with your landlord to extend the term of your lease even though you do not have a statutory right to such an extension.
What will it cost?
There will be a capital payment to your landlord which will be arrived at by negotiation with your landlord or failing that by reference to a formula as provided for in the legislation.
Please get in touch to discuss our fee structure.
It is important to note that the capital cost of the lease extension increases as the remaining term of your lease reduces by passage of time, and therefore it is important that you do not wait but rather take the initiative as soon as possible.