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.

Taking Action When Your Landlord Decides to Sell the Freehold: A Guide for Tenants

September 28, 2022

Quick Enquiry Form

You recently got a letter in the mail from your landlord stating that he is serving a Section 5 Notice and plans to sell the freehold of your building, making you an offer. You know deep down that you should investigate your choices, but where do you begin, and what exactly is section 5?

Don’t worry: we’ve got the answers and next steps you need.

For more queries related to the length of the remaining lease and how much any lease extension may cost, have a lease extension valuation valuation undertaken by an expert lease extension valuer.

What is a section 5 notice?

A Section 5 Notice is issued to eligible tenants (also known as building or property leaseholders) informing them that the landlord intends to sell the property’s freehold.

The Landlord and Tenant Act of 1987 imposes a legal requirement known as the Right of First Refusal, which requires landlords to deliver the notice to leaseholders before selling the freehold interest on the market. Failure to comply is a criminal offense.

Section 5 notices (5a, 5b, 5c, 5d) are used in a variety of situations, including when the freeholder wants to sell the freehold at an auction. However, the procedure is similar for both.

Leaseholders presented with a section 5 notice must first determine how long they have to accept, but leaseholders should be allowed at least two months to make a decision. If they are satisfied with both the price and the terms of the acquisition, they must go via a formal procedure, beginning with serving an acceptance notice on the freeholder, which must be provided by a majority of the eligible tenants.

What does a right of first refusal mean for tenants?

The first step is to recognize that this is a once-in-a-lifetime opportunity.

The Freeholder is selling their estate either to an unknown buyer, such as a developer or at an auction.

According to UK law, as a leaseholder, you have the right of first refusal and can purchase your freehold if you so desire.

Challenges

It is not easy to exercise your right. You must do the following:

Determine who will lead the process.
Collaborate with at least 50% of the apartment owners in your building.
Determine the financial viability of purchasing the freehold at the offered price.
Determine the finance arrangement.
Nominate or form a purchaser (typically a limited company) before accepting the offer in the proper legal form.

And you only have two months or fewer to complete all of this.

You must then collect the funds and complete the transaction.

Does that seem intimidating? Don’t give up!

Unlike a Collective Enfranchisement claim, you do not need to bargain over the price with this take-it-or-leave-it offer.

It is critical to be well-organized and cohesive.

Specific aspects of the procedure can be assisted by experts.

Engage a trained surveyor to evaluate the freehold’s market worth. If the offer price is less than market value, you can focus your efforts on convincing leaseholders to accept it.
There are numerous excellent solicitors available to handle the necessary legal and conveyancing procedures. Look for someone with suitable experience.

Alternatively, you can hire an expert to mentor you and manage the entire process from start to finish, generally at a reduced cost.

Profit from the advantages that come with owning a freehold, such as:. Modernize your leases, optimize building management, and prioritize those works, repairs, and improvements. All of this will add genuine value to your flats and free up your time to focus on what matters most – your life.

Leasehold Valuation specializes in leasehold valuations, lease extensions, enfranchisement. Have a quick 10-minute free consultation with one of our RICS experts.