Category: Blog

Lease extensions are a daunting task even in the best of circumstances with various strict deadlines in terms of notices and counter-notices, agreement to the premium and specific terms and completion of the documentation procedures. Lease extensions made outside the statutory route may proceed a little more quickly than when carried out under the Leasehold Reform, Housing and Urban Development Act 1993, but it is a complicated process nevertheless. Considering all that, a global pandemic further increases the uncertainty to an already challenging task.

Valuations during Covid-19

Irrespective of whether you’re following the statutory route or the voluntary route for your lease extension, it is a good thing to obtain a valuation report from a lease extension specialist surveyor. This valuation report can be prepared by the surveyor either after a physical inspection or from a Desktop Valuation. Needless to mention, desktop valuations have been unaffected by the pandemic situation.

Desktop Valuation is an assessment that is conducted remotely through resources that are available online and completely eliminates the requirement for a physical inspection. It is helpful for people who are unable to arrange access to the property for the surveyor or in case there are time and budget limitations. However, it is important to note that Desktop Valuations are an open-market appraisal of the property that are derived only from information and tools from online sources and can provide an estimate of the market value from a combination of information and experience since there is no physical inspection involved. On the other hand, Desktop Valuations can be completed quickly without the hassle of arranging access to the property and cutting down the time required for the physical survey.

But lately, the housing market has been unlocked with strict government guidelines, which means physical inspections can be carried out as long as everyone follows strict measures to ensure safety, such as following social distancing and good hygiene measures. A physical survey is an advisable option, provided the inspection can be carried out safely with all the protocols in place and provided you’re not self-isolating.

However, if you prefer not to risk somebody being in your property or are self-isolating then you can always opt for a desktop valuation, which can be just as accurate as a physical inspection, as under the law there are certain things the valuer must assume about the internal condition of the property and so does not necessarily need to physically inspect your property.

What should you expect during your valuation?

In order to keep up with the latest government guidelines concerning the Covid-19 situation, a few extra points need to be taken care of by the surveyor as well as the occupants to permit a safe and smooth inspection.

• The surveyor will ensure that nothing has been changed since the appointment was booked
• If anyone is self-isolating in the household, has been diagnosed with Covid-19 or is showing any symptoms, the surveyor will not be able to carry out the inspection and it has to be booked for a later date
• If possible, it is safer for both you and the surveyor if you’re able to leave the house during the survey. Otherwise, you may wait in the living room while the surveyor completes the inspection. If none of this is possible, please follow the surveyor’s instructions as and when they ask you to move so the inspection can be carried out easily
• The Surveyor will start by inspection of the outside front of the house then move to the outside rear. Following that they will move on to sides, outbuildings, garages, then completing the inside of the loft, upstairs, downstairs hall, ground floor WC and finally the living room
• All lights must be on to reduce contact with switches
• All internal doors, loft hatches as well as garage doors must be kept open to prevent physical contact with doors and handles
• Social distancing measures of at least 2 metres must be maintained and any kind of physical contact should be avoided. No handshakes must be exchanged and the surveyors must be equipped with the appropriate PPE
• Other government guidelines specific to your part of the country must also be followed

The damage inflicted by Covid-19 has been massive and is yet to be evaluated, but at the same time, it is important now, more than ever, to plan ahead and ensure that our financial positions are such that we can be prepared for such unforeseen situations in the future.

For the safety of everyone, Leasehold Valuations must be carried out with all protocols and frequent hand washing and good hygiene must be encouraged.

This is the first of a series of blogs that will try to explain, in layman’s terms, how the process to extend your lease is undertaken for lease extension purposes.

We will not cover every single type of lease nor every single possible situation, as that will simply not be possible during a short blog. However, if there are any questions you may have that aren’t covered in these blogs then please feel free to contact us for a free friendly professional consultation.

A separate series of blogs will explain the process for a freehold purchase (or enfranchisement to use the correct terminology).

In order to understand how valuations are undertaken it is necessary to understand a bit about the background, not only the process of extending your lease, but also how the law evolved to get us here and why certain processes need to be followed correctly in order to ensure a successful outcome.

The type of lease extensions we will be discussing are only the ones relating to residential properties (flats and houses) and only applicable to properties in England.

Leases of commercial premises (shops, warehouses etc) are governed by different legislation and are totally different in the way they are valued and calculated.

What is a lease?

A lease is a legal document between the landlord of a flat/house (hereinafter called the Lessor) and a tenant (hereinafter called a Lessee) that gives the Lessee a right to own the flat/house in question for a specified number of years (usually 99 years and above but it can be any length over 21 years). During the term of the lease it is quite normal to pay a ground rent, which may or may not increase periodically throughout the term.

For example, a typical lease may be for an original term of say 99 years paying £50 per year for the first 33 years and then increasing to £100 per year for another 33 years and then £150 per year for the final 33 years.

What is a lease Extension?

At any time during the term of the lease the lessee can exercise their legal right to extend the lease by an additional 90 years. So, for example, if you have 50 years left on your lease you can extend it to 140 years (50+90) and reduce your ground rent to effectively NIL for the whole 140 years.

However, before embarking on this process certain criteria must be satisfied. These criteria will be expanded on in the next blog.

In order to start the process certain notices have to be served and the landlord must be compensated for the loss to his investment (i.e. the landlord will receive less rent and also has to wait a further 90 years to get his property back).

Who pays the fees?

As the lessee is requesting the extension the legislation states that the lessee is responsible for both his/her own surveyor’s and solicitor’s fees as well as the landlord’s “reasonable” fees. We suggest you allow a budget of say £3,500 for all fees.

So, as you can see, this is not a cheap process but getting the correct professional advice from the outset is important if you want to extend the lease for as little as possible, with the least amount of complications and receive the correct advice.

Some people choose to opt for professional advisers who are perhaps cheaper but as the saying goes “you get what you pay for”.

To get the right advice from experienced professionals, who will also guide you through this Complex process please contact us.