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If you own a leasehold property, it is important to consider a timely renewal of your lease for your property to retain its value. A property with a long lease is more attractive to buyers should you be thinking of selling, easier to mortgage or re-mortgage, and allows you to avoid ground rent charges.
Understanding how and when to extend your lease can be difficult. If you are thinking about seeking a lease extension we highly recommend getting in touch with a knowledgeable property Solicitor to discuss your options and what to expect from the process before taking any action.
When Can You Request a Lease Extension?
You can request a lease extension at any time while you own your leasehold property, provided you meet certain minimum criteria: you have held the lease for more than 2 years, the lease has been granted for more than 21 years, and your property is not subject to any special conditions (such as if it is owned by the National Trust or the Crown).
We would highly recommend extending your lease while it still has at least 80 years left on it. If your lease is valid for less time than this, the property becomes significantly less attractive to buyers and lenders and subsequently it becomes more difficult and more expensive to extend your lease.
There are two routes to securing a lease extension: voluntary and statutory. If you have an agreement with the freeholder, you can come to a voluntary agreement to extend your lease. If not, the statutory process involves serving the freeholder with a Section 42 notice setting out your intention to extend. Your landlord can then respond with their own terms and following a period of negotiation you can come to a mutually agreeable deal.
Lease extensions can vary greatly in cost. If you have more than 80 years left on your lease, you will pay a fee agreed between yourself and your landlord during your negotiations. If you cannot agree on a price or one party feels the other is being unreasonable, a Leasehold Valuation Tribunal can be carried out to determine the price of an extension.
If you have less than 80 years left, however, you will also have to factor the cost of “marriage value” into your extension. This figure is calculated by subtracting the actual cost of the property from the price it could be sold for without a lease. The difference is the “marriage value”, and as properties with short leases are significantly more difficult to sell, this price can be high if your lease is due to expire in less than 80 years.
What We Can Offer You
Negotiating a lease extension can be a tricky legal process, and we would highly recommend getting the guidance of a Solicitor qualified in Property Law before contacting your landlord. If your lease is due to expire in less than the recommended 80 years, it is even more important to have a good Solicitor in your corner to help you fight for a fair deal.
We have helped many leasehold property owners negotiate lease extensions, and our accreditation through the Law Society’s Conveyancing Quality Scheme attests to our expertise in all fields of Property Law.