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We help 200-300 leaseholders a year to extend their leases. They are in safe hands. The South East Leasehold team has over 100 years combined experience.
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 this complete valuation and legal service genuinely under one roof. Call us now for a no obligation chat with one of our team.
The lease extension process is complex involving both valuation and legal work. It is vital you are properly represented by experienced Solicitors and Chartered Surveyors to ensure the best premium is obtained and additional unnecessary costs are avoided.
We have come up with this quick and easy calculator 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 before committing to extend your lease.
Unfortunately, your lease is a wasting asset and as its term reduces so does the value of your flat. 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 is more difficult to obtain a mortgage on normal terms. It therefore becomes difficult to sell the flat and so it reduces in value.
An extension reverses this process and 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 leaseholders were at the mercy of unscrupulous landlords who took the opportunity to charge high premiums for the extension and to increase the ground rent. Leaseholders watching their flats devalue had little option but to accept the 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 money. The cost rises every month so there is never a better time to get the process started than today.
Legislation enables the majority of flat owners to extend their lease, providing they meet certain legal criteria. This includes:
• Ownership of the property for at least 2 years.
• The original term on the lease being at least 21 years.
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 which has been calculated according to the legislation – not chosen solely by the landlord.
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.
It is possible for homeowners to approach their landlord or freeholder for an informal lease extension, if they prefer. 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 would simply prefer to follow the legal process of 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 ensuring that you are fully prepared to complete the lease extension process. This includes:
• 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 subsequent procedures – your surveyor will be able to advise
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 procedure under the Act. The process can be divided into 2 separate but dependent operations being valuation and legal. Each part is undertaken by the respective valuation or legal professional.
The starting point is to carry out 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 be put in the notice and which would eventually form the basis of any experts’ report for a tribunal. You can decide at this point whether to proceed to the legal work or not.
Our surveyors will also undertake negotiations with the freeholder’s surveyor to agree the final premium. They will also attend the tribunal as expert witnesses if the premium cannot be agreed, this is 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 in 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.
If you own your property leasehold (rather than freehold or a share of freehold), it means you have a contract with the landlord that details how long you can live there and what ground rent you must pay. The remaining term on this 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 landlord.
To prevent this from happening, apartment leaseholders are legally entitled to extend their lease term by 90 years, providing that 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 of qualifying tenants. It also ensures that future ground rent is reduced to ‘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 at least 21 years when it was granted) then you will be eligible. 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 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 price for the extension.
As long as you are a qualifying tenant, the freeholder cannot refuse to grant you an extension to your lease.
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.
Do keep in mind that once the lease term falls below 80 years, the cost of extending will become significantly higher due to Marriage Value.
If you do not meet the eligibility requirements, you can still approach your freeholder to make 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 peppercorn).
The cost of extending a lease depends on several factors, including the market value of the property, the current ground rent and the remaining term on the existing lease. Beyond this, the price you pay will be affected by the negotiations with the freeholder to come to a fair price.
You can use our lease extension calculator for an indication of your likely costs or contact us for a free quote. If you wish to go ahead with a lease extension then we can provide a best and worst-case estimate, however, there is no way to provide an exact figure for the final sum as it will need to be negotiated with the freeholder.
When carrying out a lease extension valuation, a surveyor 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:
Marriage value is the amount by which the worth of the flat has been increased due to the lease extension, which gets shared between the leaseholder and the freeholder.
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. However, existing owners can 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.