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Lease Extensions

If you own a leasehold property, you will be aware that the lease term is for a finite number of years. Once the term falls below 80 years or so, leaseholders are advised to consider approaching the freeholder to extend the term. The cost of extending the lease depends on the value of the property, the number of years left on the existing lease and the current ground rent paid.

There are two routes available to a leaseholder – first is an informal approach with the freeholder directly to agree to a new term, premium and costs; and the second is the formal statutory route that involves the serving of notices and counter-notices. If an agreement cannot be reached, the matter can be referred to a tribunal.

The process for extending a lease can be complicated and time-consuming, so it is important to get the right legal advice to protect your interests.

The Leasehold Reform (Ground Rent) Act 2022 came into force on 30th June 2022 and put an end to ground rent for most new long residential leasehold properties in England and Wales. The freeholder is permitted to charge ground rent as per the terms of the existing Lease until that term comes to an end, and then a “peppercorn rent” is charged for the extended term (no ground rent).

Once terms have been agreed between the parties, it is advised that solicitors are appointed to act for the respective parties in reviewing the Lease Extension document. This also allows the current Lease to be modernised subject to the freeholder’s approval.

The leaseholder would be expected to pay their own legal and surveyor fees, as well as the freeholder’s legal and surveyor fees, and any disbursements, in addition to the premium, making the process quite expensive. Once the lease has been extended however, the market value of the property is reflected accordingly, and is accepted by lenders for mortgage purposes. The process of extending a lease can take from 3 – 12 months from start to finish.

If you are looking for help with a Lease Extension, please call us on 02476 632121 to discuss this further.

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