Extending your Lease
Why extend your lease?
It can be hard to sell your the property you live in when the remaining lease term gets below 95 years. When it gets below 80 years it starts to make a significant difference.
Not sure how long left on your lease? Download the leasehold title from HM Land Registry (£3).
You will need to submit this with your application if you choose to go ahead.
Your Legal Right
As a long leaseholder of a residential property (lease originally granted for 21 years or more) you are entitled under the Leasehold Reform Housing and Urban Development Act 1993 to extend your current lease, provided you have been the leaseholder for (at least) the last 2 years.
What does it Cost?
The cost for to extending your lease depends upon the value of the property and how long is remaining on the lease. The impact on value increases as the lease gets shorter. However the value of your property usually goes down more significantly if the lease has less than 80 years left and the cost to extend your lease goes up significantly.
If your lease has 80 or more years unexpired, you will have to compensate the landlord for
the loss of the ground rent remaining on your current lease.
the loss of the potential right to receive back the property at the end of the current lease.
the loss in any development or other value that is reduced due to the extension of the lease.
If your lease has less than 80 years unexpired, you will in addition need to pay the landlord a share (usually 50%) of the value that would be added to your property by extending the lease
For leases of 80 years or more the cost is typically about £4-6,000 (although can be more for higher value properties), depending on the value of your property and length of lease remaining. There will also be legal and valuation fees to pay (see below).
Lease extensions are usually exempt from Stamp Duty Land Tax (SDLT).
Mortgagees are often willing to allow borrowers to add these costs to their mortgage since invariably it improves the value of the property.
For further guidance you can visit Leasehold Advisory Service, which provides independent advice from the Government about this including an approximate price calculator.
The extended lease
However you apply (see below) your lease will should be extended in the same way; as set out in the Leasehold Reform Housing and Urban Development Act 1993.
Abolition of the annual ground rent
Leases are extended for 90 years in addition to the length left on your existing lease.
On the same other terms as the existing lease but occasionally subject to minor modifications and certain statutory exclusions and additions
Landlords are entitled to insert a standard clause for redevelopment. This right does not arise until the end of the term of the existing lease and is subject to a court application and the payment of full compensation to the leaseholder for the full value of the remaining 90 years.
What to do next
All qualifying leaseholders are entitled to follow the process set out in the Leasehold Reform Housing and Urban Development Act 1993 (the formal route). Some landlords also offer an informal process is also which can be simpler, less costly, and often quicker.
Choosing to follow either route does not commit you to proceed with extending your lease but the cost is likely to go up over time as the lease gets shorter and property values rise. Also the landlord's valuation and admin fee indicated below must be paid in advance and is not refundable so it is advisable not to proceed until you have or are able to put the necessary funds in place.
Informal
Complete a simple questionnaire. If you qualify to extend your lease, you will be asked to pay the Council’s valuation fee (non-refundable).
There are no strict timescales and variations of other lease covenants cannot be considered. However the Council will normally offer a fair and reasonable but non-negotiable price to extend your lease on the current terms with 4-6 weeks.
You will have 60 days to accept this offer and complete your purchase, after which the offer would be updated and a further revaluation fee of £195 + VAT would need to be paid.
Informal applications are not transferable so if this is important (perhaps you are selling your property) then a formal application may be more suitable.
Council’s valuation and admin. fee: £800
Council’s legal costs £1,000
If you are not happy with the outcome you still have recourse to the formal route but this is likely to incur additional time and costs
Formal
Serve official notices under s.42 of the Leasehold Reform Housing and Urban Development Act 1993.
The process is subject to strict timescales but variations of other lease covenants can be considered. By law you have the right to appeal the timescale, the price and the Council’s costs, to the Lands Tribunal or County Court
Statutory notices are usually served by a solicitor an in most cases you would also need professional valuation advice. Naturally these stages would incur professional fees.
Formal applications are usually transferable which will be beneficial if you have agreed the sale of your property. Applicants are recommended to consult their solicitor first.
Council’s valuation and admin. fee: £800
Council’s legal costs £1,200
If you are not happy with the landlord's offer and your surveyor is unable to negotiate an agreed value with the landlord's, the case can be referred to an independent tribunal.
To begin, your solicitor should serve notice under s.42 of the Leasehold Reform Housing and Urban Development Act 1993 to housingmatters@enfield.gov.uk
To be sure you receive confirmations and important emails from us concerning your lease extension, please make sure you add admin@ambercycle.co.uk to your safe senders.
In all cases it is advisable to use a solicitor to make and register the final changes to the lease and title with HM Land registry. Whichever route you choose, legal fees will be more if you have a mortgage on the property as the solicitor will also need to act for the mortgagee.
You should obtain an estimate from your solicitor but, as a guide, this could cost around £1,000 + VAT. Legal costs under the formal route (including service of official notices) may be greater.
Finance
Before proceeding with the extension, it is advisable to make sure you can access or raise the necessary funds (e.g. from savings or remortgage) to pay the landlord’s premium and the statutory deposit (usually 10%). You may have to pay this before your flat has been sold.
Date of valuation
Pease note the valuation and the length of your lease are fixed and calculated from the date on which you paid your invoice valuation fee under the informal route or the date of your legal s.42 notice if using the formal route.
Inspecting your property
You will need to provide us with contact details for arranging an inspection of the property for the valuations. Inspections take place 9am – 5pm Mon-Fri and take up to 30 mins. The valuer will not collect keys so we ask for you or someone you trust to be in attendance during this time. The inspection will require photographs and measurements to be taken so access should be provided to all rooms/areas. You may be asked for evidence for the cost and installation date of any improvements.
Monies owed to the Landlord
However, you apply, the landlord is entitled to require you to pay any outstanding ground rent or service/major works charges and you will do so before legal completion.
Further Queries
If you still have questions unanswered, please contact us and we will revert as quickly as possible. Alternatively you can call 01923 220002 if you need help completing the online application form.