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About

A lease extension is a legal right that qualifying leaseholders have to extend their leasehold by up to 90 years, depending on the property. There are eligibility rules for whether this applies and the process of extending the lease involves negotiations and legal processeses between the leaseholder and the landlord which are often handled by solicitors.Next steps

How much does a Lease Extension cost?

The cost for a licensed solicitor to help with a Lease Extension is dependent on many factors including the complexity and specific requirements of the case. On average it is expected to range from £870-£1,500 but in some cases it could cost as much as £1,850.

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Lease Extension Solicitors

Lease extensions are well-known for their complexity. With so much to consider from serving tenant's notice to negotiating the best deal, it can be hard to know where to start.

But there are very good reasons for extending a lease, many of which we'll cover in this article.

lease-extension-guide

What is a lease extension? 

A lease extension is an agreement between a freeholder and a leaseholder that extends the term of a leasehold property.  

When a leaseholder and a freeholder agree to a lease extension, they’re making a brand new lease with updated terms and dates. The new lease says when the extension starts and when it ends, as well as outlining any new terms and conditions, like who is responsible for repairs. 

In UK law, the Leasehold Reform Housing and Urban Development Act 1993 gives leaseholders the legal right to extend a lease. 

Why should I extend my lease?

Properties with shorter leases often don’t sell for as much as those with longer leases, especially if the lease term drops below 90 years. 

In particular, leases under 80 years can be infamously difficult to sell because mortgage lenders are unwilling to give a mortgage on them, or even let current owners remortgage.

There’s also something called “marriage value” to take into account. If a lease drops below 80 years, the freeholder can charge marriage value on top of the regular cost of extending a lease. This makes extending a lease that has dropped below 80 years much more expensive, and even more of a turn-off for potential buyers. 

For these reasons, it’s often wise for leaseholders to extend a lease to avoid these kinds of issues, particularly if selling the property is on the cards. 

What are the different types of lease extensions? 

The two different types of lease extensions are: statutory and voluntary. 

Statutory lease extensions 

A statutory lease extension lets a property owner of two years or more add 90 years to a remaining lease term. 

Voluntary lease extensions

Voluntary lease extensions are when a leaseholder doesn’t qualify for a statutory extension but approaches their landlord to ask for one anyway. 

Statutory vs voluntary lease extensions

So, which is better: a statutory lease or a voluntary lease extension? Let's take a look at some of the pros and cons.  

Pros and cons of statutory lease extensions

There are clear benefits to a statutory lease extension. The most obvious being that a lease can be extended for 90 years. Other benefits include the fact that ground rent is no longer payable to the landlord following a statutory lease extension and the landlord can’t generally refuse one.

However, the process can take a long time. In fact, there are certain timescales that have to be followed, and not following them can result in significant delays. It can also be quite costly. For example, it is the leaseholders responsibility to find and pay for a surveyor to value the property and has to pay the landlord’s fees too. 

Pros and cons of voluntary lease extensions

On the flip side, voluntary lease extensions cost less in general and there are no requirements for a leaseholder to have owned the property for a certain amount of control. 

However, in voluntary lease extensions the landlord holds all of the cards. They say how much a leaseholder must pay and how long the extension will be for. With voluntary lease extensions ground rent is still on the table too. 

Who can extend their lease? 

To legally extend a lease, a person must have their name registered as the owner of the property with the Land Registry for at least two years. You don’t actually need to have lived in the property for two years, just owned it. 

But, if you decide to add a partner or a friend to the property’s title deeds later on, that two-year countdown starts all over again. 

The legal right to extend a lease comes from the Leasehold Reform, Housing and Urban Development Act 1993. It means that leaseholders can add 90 years to a lease and reduce ground rent to zero. Providing the correct process is followed, a freeholder can’t refuse a lease extension. 

It’s also worth noting that if you originally bought your property through shared ownership and you’re in the process of staircasing to 100%, you won’t have the right to extend your lease. 

Extending a lease on a house

When it comes to extending the lease on a house, it's a bit different from flats, which this guide primarily covers.

You usually have the right to extend it, but only by 50 years. The person who owns the land (that's the freeholder) could decide to give you more than 50 years if they're okay with it, but that's up to them.

The rules around lease extension for houses are a bit more complicated compared to flats. In recent years, there's been some controversy because some new houses have been sold as leaseholds instead of freeholds. This can make things more restrictive.

So, if you're thinking about extending your house lease, it's a good idea to get advice from a lease extension solicitor to make sure you do the right thing.

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How to extend a lease

how-to-extend-a-lease

There are a number of steps in the lease extension process. Let’s break it down: 

Step 1 - Appoint a valuer and lease extension solicitor 

For lease extensions, it is the job of the valuer to help you figure out how much to offer. They’ll do this by giving you a best and worst case valuation and assisting you in negotiating the final premium and terms of the lease. 

A lease extension solicitor can help prepare your application and serve the appropriate notice to the right people. They can also help with conveyancing (i.e. the legal process in buying the new lease). 

If you need some help finding a solicitor, check out our guide on how to find the best solicitor.

Step 2 - Work out the premium 

The premium is the final price you agree with the freeholder to extend the lease. 

There are no hard and fast rules on how much a lease extension should cost, but an expert valuation should help you understand the best and worst case scenario, plus other costs you may be liable for through the course of the process. 

Step 3 - Serve the tenant’s notice 

A lease extension solicitor can help you get your hands on all of the information you need to serve the tenant’s notice (section 42 notice) in the correct way.

This notice should be served to the ‘competent landlord.’ It’s important to note that the ‘competent landlord’ is not always the freeholder. It is the person with a lease that is at least 90 years longer than yours. 

If your immediate landlord is not the competent landlord, you can find out more information using the Land Registry or by serving the appropriate notices. 

If you can’t find your landlord, they are called an absent landlord, and there are processes in place to help you apply for a new lease. 

Step 4 - Pay the deposit 

A landlord can request either a deposit of £250 or 10% of the premium proposed in the tenant’s notice, whichever is more.

Step 5 - Negotiations 

A landlord can serve a counter-notice that either admits the leaseholder rights to the new lease and accepts the terms, doesn’t admit the right to the new lease, or claims the right to redevelop. 

If a landlord and leaseholder can’t agree on the price of the extended lease or anything else, they can apply to a tribunal for an independent decision on the matter. 

How much does a lease extension cost? 

The cost of leasehold extension can vary widely depending on negotiations between the landlord and leaseholder. 

Generally, how much it costs takes into account: 

  • How much less the freeholder’s property is worth after extending the lease: This includes income they would have earned from ground rent for the remaining original term and the loss because they have to wait longer for ownership of the property to transfer back to them when the lease ends); 

  • The marriage value: This is the possible increase in a property's value because of the new lease. The law says this increase should be shared equally between leaseholder and freeholders;

  • Compensation: This is to make up for any other losses a freeholder might have due to the lease extension. In most cases, because they keep the freehold, there’s no need for compensation. The only time compensation may be appropriate is if they lose the opportunity to redevelop or convert a property. 

It’s also wise to consider other costs related to a lease extension, like solicitor fees and surveyor fees for yourself and the landlord. 

How long does a lease extension take? 

Voluntary lease extensions are often quicker than statutory, and can take anywhere between 2-3 months to sort out. 

Statutory lease extensions take longer because there are prescribed timelines that must be followed, for example:

  • A landlord has 2 months to accept an offer or suggest a counter-offer

  • They also have up to 6 months to agree on the premium and terms of the new lease 

That puts the time it takes for a statutory lease extension at 8 months, if the landlord takes the maximum time limits to accept an offer and agree the terms. 

Therefore, it can take anywhere from 8 months to upwards of a year to complete a statutory lease extension. 

Other factors can also influence how long a lease extension takes, like if a leaseholder can’t get in touch with the landlord. 

Do I need a solicitor for a lease extension? 

Yes, you need a specialist lease extension solicitor for a lease extension whether it’s formal or informal.

As a lease extension is a very complicated legal area with lots of things to consider, without a solicitor on your side, you could end up paying more than you need to for a lease extension or cause unnecessary delays to the process by not following the proper legal procedures.

How much does a solicitor charge for a lease extension?

The cost for a licensed solicitor to help with a lease extension is dependent on many factors including the complexity and specific requirements of the case. On average it is expected to range from £870-£1,500 but in some cases it could cost exceed £2,000. 

To get a free fixed-fee quote for the help of our lease extension solicitors, start a free case assessment now

How will upcoming leasehold reforms affect lease extensions?

The process of extending your lease or buying the freehold is getting a major overhaul soon(ish) and it's all in favour of making it easier and more affordable.

The government have put forward some plans to change the game and help leaseholders like you save some money and reduce the headaches associated with extending a lease.

Here's what we know about leasehold reforms so far:

1. Everyone who can extend their lease will have the right to do so for a whopping 990 years. Currently, people with houses can only extend by 50 years, and flat owners can do it for 90 years.

2. The good news is that many leaseholders will likely pay less, thanks to these changes. One key change is the abolition of 'marriage value,' which is an extra charge that kicks in when your lease drops to less than 80 years.

It is not yet clear if and when these reforms will come into force, but it is expected that the leasehold reform bill will be included in the upcoming King's Speech on November 7th 2023. So watch this space!

Get help from a lease extension solicitor 

If you are a leaseholder considering extending your lease to unlock the benefits that might bring, it’s so important to seek help from the right professionals including valuation surveyors and lease extension solicitors. 

Our property solicitors are on hand to help you with: 

  • Informal lease extensions; 

  • Statutory lease extensions; 

  • Applying to the First Tier Tribunal (Property Chamber); 

  • Preparing documents for the court; 

  • Representing you in lease extension hearings. 

All of our solicitors work online for fixed-fees, so you always know how much you're paying and what for. 

Get a free case assessment now to find the best lease extension solicitor for your case and start working with them within 48 hours. 

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