How to extend your lease in the UK?

This second blog in a series of blogs attempting to explain in layman’s terms the process of extending your lease, whether for a flat or house. Please see our previous blogs in this series and also all other blogs which are intended to help you understand this complex piece of legislation.

Which legislation covers the extension of a residential lease or purchasing the freehold of a block of flats?

There have been many statutes that govern issues surrounding flats and houses over the years. The current ones that are relevant are “Leasehold Reform, Housing and Urban Development Act 1993” for flats and “the Commonhold & Leasehold Reform Act 2002” for houses.

Who can apply for a lease extension?

In order to exercise your rights under either of the above statutes you now only need to have owned (not necessarily lived in) the property for at least 2 years.

How long can I extend my lease for?

Although you are free to agree to any extended term between freeholder and leaseholder the default positions, in the absence of agreement, are as follows.

For a flat you can extend your lease for an additional 90 years (e.g if you currently have 67 years left on your lease your extended lease will end up with 157 years on it).

For a house you can extend your lease by 50 years (so using the example above your extended lease will end up with 117 years on it).

What are the qualifying criteria?

As mentioned in our first blog certain criteria have to be met in order for you to qualify to have your lease extended.

For flats:

–          You have to have owned the flat for at least 2 years;

–          Your ownership of the flat must be held  under a qualifying lease;

–          A qualifying lease is one that is for a fixed term of at least 21 years;

–          The property which you wish to extend must be a “flat” as described under the definition;

For houses:

–          You must be the tenant of the whole house unless you are already the freeholder of those parts of the house of which you are not the tenant.

–          A qualifying lease is one that is for a fixed term of at least 21 years;

–          You have to have owned the house for at least 2 years.

–          Your rent must be classed as a “low rent”. The definition of this is quite complex and so please contact us for further guidance.

What rent do I end up paying after the lease extensions?

Regardless of what ground rent you were paying before the lease extension for a flat your rent will decrease to effectively NIL.

I say effectively because under the legislation the ground rent reduces to a peppercorn which is equivalent to £1 per year but landlords very rarely charge this as it become uneconomical to do so.

For a house extension your rent will change to a “Modern rent”. A “modern rent” is the market rent as on the date of valuation for the site (not including the house or any other buildings on it).

The method of valuing this “modern rent” is extremely complicated and so please contact us for further advice if required