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South East Leasehold – Lease Extensions
We offer a fresh approach to extending your lease or buying your freehold. We cover the entire journey from start to finish, all under one roof, for your convenience and peace of mind. We are the first and only dedicated company to offer both valuation and legal services in house. We are Chartered Surveyors and Solicitors specialising in leasehold matters across London and the South East including Beckenham, Croydon, Bromley and the surrounding areas. Our main area of expertise is enfranchisement – lease extensions and freehold purchases.
We have an extensive client portfolio ranging from individual leaseholders to large freeholders. We offer unrivalled levels of knowledge and experience in the field. If you are a Leaseholder or a Freeholder, we offer a wealth of specialist expertise to help with your lease extension or leasehold enfranchisement.
Call us now for a free no obligation discussion about your requirements on 0207 186 0767.
Lease Extension Experts
The South East Leasehold team has over 100 years’ combined experience. We help hundreds of leaseholders every year to extend their leases.
We undertake the whole process from start to finish, at a fixed fee. In fact, we are the only company in the UK to provide a complete valuation and legal service genuinely under one roof.Lease extensions are a complex process, involving both valuation and legal work. It is vital that you are properly represented by an experienced Solicitor and a Chartered Surveyors to ensure that you obtain the best premium while avoiding unnecessary additional costs.
How Much Does a Lease Extensions Cost?
Use Our Lease Extension Calculator
The quick and easy lease extension calculator below is a useful tool to give you an indication of the likely cost of your lease extension. The calculator is for information purposes only. South East Leasehold will not be held liable for any loss arising from reliance on the figures given here. You should always obtain a full inspection and valuation from a Chartered Surveyor before committing to extending your lease.
If you are unsure of your ground rent please enter £100.
Common FAQs about Lease Extensions
What is a Lease Extension?
If you own your property on a leasehold basis (rather than freehold or share of freehold), it means you have a contract with the landlord that details how long you can live there and the amount of ground rent you must pay. The remaining term on the lease reduces every year and, if you were to do nothing to stop it, would eventually deplete to zero. At this point, full ownership of your property would revert to the freeholder.
To prevent this from happening, apartment leaseholders are legally entitled to extend their lease term by 90 years, provided they meet certain eligibility criteria. This process involves having a professional leasehold valuation carried out and negotiating a lease extension agreement with the freeholder.
Leaseholder rights are outlined in the Leasehold Reform Housing and Urban Development Act 1993, which compels freeholders to provide a 90-year extension to the lease terms for qualifying tenants. It also stipulates that future ground rent is reduced to a ‘peppercorn’ (zero).
As long as you have owned the property for at least two years and possess a long lease (one that had a minimum of 21 years when it was granted), then you should be eligible for a statutory lease extension. However, it should be noted that this process does not apply to commercial leases or property that is owned by a charitable housing trust.
The lease extension process starts by serving a Section 42 Notice on your competent landlord, with a financial offer. The landlord can then choose to accept this offer or respond with a Counter-Notice and their own asking price. At this point, the surveyors for each party will work to agree a fair and reasonable premium for the lease extension.
Why Should You Extend Your Lease?
Unfortunately, your lease is a depreciating asset and as its term reduces, so does the value of your property. The extent of this is not fully appreciated in the early years because the decrease in value is generally offset by increases in the housing market. However, when the term reaches 70 years or less, it becomes much more difficult to obtain a mortgage on normal terms. It therefore becomes difficult to sell the flat and so it can rapidly reduce in value.
An extension reverses this process so that the full value of the flat can be realised on sale. This is the main reason people extend their leases. Unfortunately, the longer you leave it to extend your lease, the more expensive it becomes.
Before the Leasehold Reform Act came into force, leaseholders were at the mercy of unscrupulous landlords who took the opportunity to charge high premiums for the extension and increase the ground rent. Leaseholders watching their flats devalue had little option but to accept their landlord’s terms.
Extending your lease is one of the most important investment decisions you can make. It will restore the value of your home, provide security and excellent returns on your capital. The cost rises every month, so there is never a better time to get the process started than today.
Am I eligible for a lease extension?
Legislation enables the majority of flat owners to extend their lease, provided they meet certain eligibility criteria. These include:
- Ownership of the property for at least 2 years.
- The original term on the lease being at least 21 years.
However, if the freeholder is a charitable housing trust and the property is provided as part of the charity’s work, you will not be eligible. Neither do statutory lease extensions apply to business or commercial leases.
What am I entitled to during the procedure?
Lease Extension entitles the leasehold owner to:
- 90 years being added to the remaining term.
- Ground rent being reduced to zero (sometimes referred to as a ‘peppercorn’) for the entirety of the lease.
- A premium that is calculated according to the law (not chosen solely by the landlord)
How much will it cost?
Freeholders are entitled to be compensated for the financial loss caused by the extension of the lease, which translates into a premium paid by the leaseholder. This premium takes into account:
- The decrease in value of the freeholder’s interest, caused by the additional 90 years before they may regain control of the land.
- The increase in the value of the property, caused by the lease extension (half of which is paid to the freeholder as ‘marriage value’)
- Compensation to the freeholder for reducing the ground rent to zero.
How do I get started?
It is possible for homeowners to approach their landlord or freeholder for an informal lease extension, rather than through the statutory process. Some seek professional advice before doing so, to make sure that the premium they are offering has a reasonable chance of being accepted. Others may find that the counter-offer presented by their freeholder seems unfair, or that they would prefer to follow the legal process to obtain a statutory lease extension.
To begin the formal proceedings, you will need a professional lease extension valuation, upon which negotiations with your landlord can be based. After receiving this, you can serve your Initial Notice, also known as a Section 42 Notice, on your landlord, which sets the process in motion.
Before you serve Notice, there are recommended steps to ensure that you are fully prepared to complete the lease extension process. These include:
- Checking eligibility – not only your own, but seeking out the “competent landlord”
- Choosing and instructing professional advisers
- Obtaining a lease extension valuation to assess the premium
- Getting your finances in order to pay the premium
- Preparing your Notice
- Preparing for the next steps – your surveyor will be able to advise
What will South East Leasehold do?
South East Leasehold are Chartered Surveyors and Qualified Solicitors. We will undertake the whole valuation and legal process for you from start to finish. We will also advise you as to the correct legal procedure under the Act. The process can be divided into two separate (but dependent) operations: valuation and legal. Each part is undertaken by the respective valuation or legal professional at South East Leasehold.
The starting point is to prepare a valuation of the property and to examine the lease to determine the premium to be paid for the extension. This is carried out by our Surveyors. We will provide a full valuation report, which is the detailed argued case for the figure we recommend to be put in the Notice and which would eventually form the basis of any expert report for a tribunal. You can decide at this point whether or not to proceed to the legal work.
Our Surveyors will also undertake negotiations with the freeholder’s surveyor to agree the final premium. Where necessary, they will also attend the tribunal as expert witnesses if the premium cannot be agreed, although this would be under separate instruction from you.
Our Solicitors will serve the Initial Notice on the freeholder, incorporating the figure we have recommended in the valuation report. This is the start of the legal procedure. There is then a two-month period during which the freeholder will serve a Counter Notice (Section 45 Notice).
Following the agreement of the premium, our Solicitors will negotiate with the freeholder’s solicitor to agree the lease terms. Once agreed, they will complete the lease extension and register at the Land Registry.
Can a lease extension be refused?
As long as you are a qualifying tenant, the freeholder cannot refuse to grant you an extension to your lease.
Serving the Initial Notice under Section 42 triggers the legal process for buying the new lease and it is absolutely critical to ensure that all the information supplied is complete and correct. An incomplete Notice will not be valid and can be rejected by the competent landlord. This is where South East Leasehold can add real value to your application.
How do I proceed with an absent freeholder?
If the landlord cannot be found despite your best endeavours, and you therefore cannot serve the Initial Notice, you can still apply for a statutory lease extension. Where a freeholder is absent, the county court will grant a Vesting Order to extend the lease. The court will usually refer the case to the First-Tier Tribunal to decide how much the premium should be.
What is the minimum lease extension?
The formal process allows leases to be extended by 90 years, although an informal agreement with the landlord could be made for a shorter extension. There is no minimum requirement for the remaining lease term, as long as the initial lease was for at least 21 years.
It is important to bear in mind that once the lease term falls below 80 years, the cost of extending it will become significantly higher due to the impact of Marriage Value.
What is an informal lease extension?
If you do not meet the eligibility requirements for a statutory lease extension, you can still approach your freeholder to obtain an informal agreement. The main difference is that they are not compelled to agree to the extension, nor follow the same rules as they would for a qualifying leaseholder (for example, reducing the ground rent to zero).
What is a lease extension valuation?
When carrying out a lease extension valuation, our Surveyors will look at several things. This includes the outstanding term of the lease, the current rate of ground rent, the property’s market value and its potential for a value increase following the lease extension.
The estimate for your premium will include:
- The reduction in the value of the landlord’s interest (essentially the loss of ground rent for the remainder of the original term).
- Compensation for the landlord’s inability to access the property for a further 90 years.
- Half of the marriage value, if the current term has fallen below 80 years.
What is ‘marriage value’?
Marriage value is the amount by which the value of the flat goes up as a result of a lease extension. The amount is shared between the leaseholder and the freeholder. Where the unexpired term of the lease exceeds 80 years, the marriage value is zero. Below 80 years, however, the freeholder is entitled to 50% of the marriage value, which pushes up the cost of extending your lease.
How long does a lease extension take?
In most cases, we can complete leasehold extensions within 3 months. If the leaseholder and freeholder are already on good terms and have discussed the prospect of an extension, it may be faster.
On the other hand, where absent freeholders need to be located or no agreement can be made between the leaseholder and freeholder, the matter may escalate to the Leasehold Valuation Tribunal and can take a year.
If you are planning to sell your home and are concerned about extending your lease to increase its value, it’s best to start the process sooner rather than later. That said, it is possible for existing owners to begin a lease extension and then sign the benefit over to new buyers, so that they won’t have to worry about waiting two years to become eligible.
Regulated by the Solicitors Regulation Authority (SRA)
South East Leasehold is SRA regulated in accordance with the regulatory objectives of the Legal Services Act 2007. The SRA is an independent regulatory body of the Law Society of England and Wales. Prior to 2007, the SRA was known as the Law Society Regulation Board. The SRA adheres to the principles within these objectives and operates according to two main aims: To protect the public, ensuring solicitors maintain high standards, and to ensure that solicitors act in the interest of consumers when risks are identified.
The new SRA Handbook is based around 10 mandatory principles that apply to all solicitors and firms regulated by the SRA and everyone who works within them:
1. Uphold the rule of law and the proper administration of justice
2. Act with integrity
3. Not allow your independence to be compromised
4. Act in the best interests of each client
5. Provide a proper standard of service to your clients
6. Behave in a way that maintains the trust that the public places in you and in the provision of legal services
7. Comply with your legal and regulatory obligations and deal with your regulators and ombudsmen in an open, timely and co-operative manner
8. Run your business or carry out your role in the business effectively and in accordance with proper governance and sound financial and risk management principles
9. Run your business or carry out your role in the business in a way that encourages equality of opportunity and respect for diversity
10. Protect client money and assets
SRA authorisation number 598379
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