When you instruct us to manage your lease extension you can be assured you are receiving accurate advice based on many years of expertise. Lease extensions can be costly and time-consuming, therefore it is vital to engage a law firm that has the knowledge and experience of how the process works. At Bennett Oakley Solicitors we have spent many decades helping clients extend the lease on their leasehold properties both in Sussex and around London.
Why would I want to extend my lease?
As the time left on a leasehold property lease gets shorter, the property decreases in value and the cost of extending the lease increases. Mortgage lenders are often reluctant to lend on a property with a short lease which makes selling the property much more difficult.
If your lease is reaching 83-81 years left to run you need to organise a lease extension as soon as possible. If you try and extend a lease that has less than 80 years to run the freeholder (the owner of the land) is entitled to a ‘Marriage Fee’. This fee is half the estimated increase of the value of the property after the lease extension has been granted. A freeholder is only entitled to a marriage fee if a lease has less than 80 years to run.
Will I qualify for a lease extension?
Under The Leasehold Reform, Housing and Urban Development Act 1993, almost every leaseholder has the right to extend the lease on their property if:
- They have owned the property for two years or more; and
- They were granted a ‘long lease’, that is a lease of 21 years or more.
Technically speaking, under the Act, the lease is not actually extended, the leaseholder surrenders the existing lease and enters into a new one. The terms are usually for 90 years. Therefore, if you have 85 years left on the lease of your property and are granted an extension of 90 years the total amount of time left on the new lease will be 175 years.
What is the process for a lease extension?
You may wish to approach the freeholder informally after you acquire your property and ask about extending the lease. Under The Leasehold Reform, Housing and Urban Development Act 1993, a freeholder is legally required to extend a lease if the leaseholder makes a formal application and has owned the property for two years or more so most freeholders are open to informal talks. You are likely to receive a far higher quote for extending the lease under an informal offer so you need to be able to negotiate strongly. It is advisable to instruct a lawyer who is experienced in these matters to do this for you.
One drawback of an informal agreement is that the freeholder may wish to keep or increase the ground rent payable on the remainder of the lease. If you extend the lease under the The Leasehold Reform, Housing and Urban Development Act 1993, then the ground rent payable is reduced to £0 for the remaining period of the lease.
If you are unable to reach an informal agreement, after you have owned the property for two years, you can make a formal application by serving a Section 42 notice on the freeholder. There is a lot of preparation work to do before the notice is served and if you instruct us to manage your lease extension we can prepare this for you. Please note that you will be liable for the freeholders legal costs (the costs must be reasonable).
Call us today
Both informal and formal lease extensions need an experienced, competent legal professional to ensure the documentation is watertight and the terms are negotiated fairly. Our lawyers can guide you through the process step by step for a fixed fee so you will know exactly what your legal costs will be before you begin.
If you need to extend your lease or you are a freeholder whose tenants are asking for an extension then contact us today to engage our expertise. You can also phone us on 01444 235 232 to make an appointment to see one of our lawyers.