What is a leasehold extension?

A leasehold extension is the process of extending the lease term of a property held on a leasehold basis. It helps maintain the property's value and desirability. Leasehold extension legislation allows leaseholders to extend their lease, ensuring the property remains attractive for sale or mortgage purposes.

How long is a leasehold extension ?

The length of a leasehold extension can vary depending on the jurisdiction and specific circumstances. In some countries, such as the United Kingdom, leasehold extensions are typically granted for an additional 90 years beyond the remaining term of the existing lease. However, it's important to note that leasehold extension regulations can differ, and it's advisable to consult local laws or seek professional advice like leasehold valuations for accurate information regarding leasehold extensions in a specific jurisdiction.

What are the benefits of lease extension ?

Extending the leasehold of a property offers benefits such as increased property value, improved marketability, easier access to mortgage financing, peace of mind and security, the avoidance of escalating costs, and more control over property management.

What happens to leasehold property after 99 years ?

After 99 years, the leasehold property typically reverts back to the freeholder, unless the lease is extended by the leaseholder. The ownership of the property, along with the land it is built on, returns to the freeholder once the lease expires. As a lease approaches its expiration, the property’s value may decrease, making it more challenging to sell or mortgage. It is advisable for leaseholders to consider extending their lease well before it reaches the 99-year mark to maintain the property’s value and their ownership rights.

Why choose leasehold Valuations for Lease extension or Buying Freehold ?

1. Fair Price: A leasehold valuation ensures you pay a fair price for a lease extension or freehold purchase.2. Increased Property Value: Extending the lease or buying the freehold can potentially increase your property’s value.3. Cost Savings: Accurate valuation helps minimise future costs like ground rent.4. Stronger Negotiation: A valuation report strengthens your position during negotiations with landlords.5. Legal Compliance: Valuations ensure you meet legal requirements for lease extensions or freehold purchases.6. Future Planning: Valuations help you plan for selling or passing on the property to future generations.7. Expert Advice: Engaging a valuer provides access to their expertise and guidance.8. Mortgage Support: Valuation reports improve your mortgage opportunities for lease extensions or freehold purchases.

How much does it cost to renew a leasehold ?

The cost of renewing a leasehold in the UK can vary depending on various factors, such as the property value, the length of the renewal term, and any negotiations between the leaseholder and the freeholder. Unlike extending a lease, which typically involves paying a premium to the freeholder, renewing a lease generally involves paying a nominal fee known as a “peppercorn rent” or a small percentage of the property value.The exact cost of renewing a leasehold will depend on the specific terms agreed upon between the parties involved. It is advisable to consult with a solicitor or a licenced conveyancer who specialises in leasehold matters to get an accurate estimate of the costs involved based on your particular situation.

Q. How much does it cost to extend a leasehold in uk ?

The cost of extending a leasehold in the UK can range from a few thousand pounds to tens of thousands of pounds, depending on factors such as the remaining lease length, property value, and negotiated terms with the freeholder. Additional costs include legal fees, valuation fees, and disbursements such as Land Registry fees. It’s recommended to seek professional advice for an accurate estimate based on your specific situation.

What Happens When the Lease Expires on a Leasehold Property_

How to avoid the most common issues in Lease Extension in UK

December 24, 2020

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The process of adding more years onto your lease is called Lease Extension. Due to the complexity of the lease extension valuation and the overall process, it comes with its own issues. Here we will discuss how to avoid the most common issues in Lease Extension in UK. Most flat owners and a fair number of house owners in the UK are long leaseholders. This means they do not own the freehold of their homes and are in a tenant/landlord relationship with the owner. Leases on flats or houses last normally up to 99 years or 125 years from when the property is built. After this, the property goes back to the freeholder. Lease extension in the UK can be carried out if you are an eligible leaseholder. The lease agreement holds the details about the rights on the property of the leaseholder and the freeholder. This arrangement comes with its fair share of problems. For example, if the duration of your lease falls below 80 years it can significantly decrease the value of your property and make it harder for you to sell it. Fewer mortgage lenders will be willing to lend against it.

Most common issues in lease extension

Lease extension in UK can be a daunting task and comes at a cost. You may use the lease extension calculator to find out the costs but the process of lease extension valuation calls for complex calculations considering the length of the lease, ground rent, value of the property when it is extended and various other factors. After the freeholder’s and the leaseholder’s surveyors have done their valuation it comes down to negotiations between the freeholder and the leaseholder. The Lease Extension Valuation calculator in UK can also get you an estimate of the lease extension costs. All this turns into a rather tedious process and takes an enormous amount of time. It is best to hire a solicitor to carry out the processes due to the legal documentation involved.

Issues with Informal Lease Extension

Keep in mind that current laws require the leaseholder to pay everything including the expenses of the solicitor and surveyors of both the leaseholder and the freeholder’s and obviously the premium. This is why it is sometimes tempting to skip the statutory process and strike an informal negotiation with the freeholder. This process can be faster and save expenses related to the freeholder’s surveyor.

But it is important to note that taking the statutory route can make your ground rent negligible. On the other hand, making an informal lease extension runs the risk of increasing it. Making an informal lease extension also deprives you of the protection and security provided by the lease extension legislation. The freeholder may set the terms of the lease to his own liking, which may include increasing the ground rent.

There is also the possibility that the freeholder may just extend the lease back up to 90 years or 99 years instead of giving you an additional 90 years. This means either you or a new owner may have to go through the entire lease extension process again.

When to extend a lease

If you are trying to extend a lease that has fallen below 80 years, it may burn a hole in your pocket because lease extensions get much more expensive after that period. So every year that you wait for your lease extension, the more expensive it gets. When it comes to selling your house, any new buyer will find it hard to be accepted for a mortgage when the duration of your lease has fallen below this level. So the number of years left on your lease is critical for selling or remortgaging your property.

As per The 1993 Leasehold Reform Act, if you are a flat owner, you are entitled to a lease extension on your flat after you have owned the property for at least two years. You possess the right to extend the lease by 90 years and reduce the ground rent to zero. But if you own a house you only gain an additional 50 years upon extending the lease which makes buying the freehold a better option.

Issues with service charges

Services charges are the amount that the landlord charges from the leaseholders in return for providing maintenance and repairs to the property. The terms and conditions for these are laid out in the lease agreement. Service charges may include the cost of services like general maintenance, cleaning of shared areas, repairs, building insurance etc. This is one of the main areas where disputes are expected to occur between the leaseholder and the freeholder.

The service charges could either be fixed or set on a variable basis. Fixed charges are where the leaseholder is required to pay a fixed amount irrespective of the actual costs to the freeholder. The fixed charge is now usually a part of older leases because as costs increased due to inflation, the freeholders now prefer to charge based on the actual cost of the services to make sure they recover their costs every year. These charges may change from time to time and are called variable service charges.

Service charges may fluctuate but the freeholder is allowed to recover only a reasonable amount from the leaseholder and if at any point you find the freeholder being unreasonable with the amount he is charging you have the right to apply to the tribunal to challenge these service charges.

It is a good idea to find out what the current and future service charges are going to be for a leasehold flat that you are about to buy.

Preparing the Tenant’s notice

The process for a lease extension starts with the valuation and then to service of the tenant’s notice. Note that from the date of receipt of the notice by the landlord you are liable for costs incurred by the landlord concerning your lease extension. So make sure that there are no errors in your notice and that it is up to the mark and accurate. If the tenant’s notice is found incomplete, it becomes invalid and the landlord has the right to reject it. You may apply to the County Court to get this corrected but this will cost you additional money so it is best to avoid that from happening.

It is recommended to register your notice with the Land Registry because, in the event where the landlord sells the freehold to another, the lease extension procedure can continue as though the new owner had received the original notice.

It is best to instruct a solicitor to prepare the notice and serve it so you can avoid any mistakes which may lead to legal issues arising from it.

If you are looking for help with Lease Extension is Slough we are happy to help. Our team of chartered surveyors can help you successfully negotiate your lease extensions or enfranchisement. Contact us for a consultation today.