If you own a residential leasehold property you may have the right to extend the lease by a further 90 years on the un-expired term of the existing lease at a peppercorn rent. Extending the lease can increase the value of the property as it helps when you come to sell it or if you need to re-mortgage.
Am I eligible to extend my lease?
In most cases once you have owned your residential leasehold for 2 years you can apply to extend the lease.
How do I extend the lease?
We can advise on the process – there are some strict time-limits to be kept to so it is important to take expert advice.
Whether you are a tenant applying to extend a lease or a landlord receiving such a request, it will be necessary to obtain a professional valuation of the lease extension. We can instruct an expert to assist.
It is sometimes possible to begin the process of a lease extension with an informal enquiry.
Otherwise the process begins with service of a formal Notice by the tenant on the landlord, confirming that they wish to extend their lease and putting forward the price they are proposing to pay for that lease extension.
A tenant can be required to pay 10% of the value they are proposing to pay for the extension.
If the landlord agrees the proposed price a new lease can be drawn up. If not then a counter-Notice will be served by the landlord to put forward the price they say should be paid for the extension.
There is then a period of between 2 and 6 months allowed for negotiations on the value of the lease extension. If agreement cannot be reached then an application to the First Tier (Property Chamber) should be made for a determination of the value of the lease extension. If no application is made before the deadline the extension application is considered withdrawn.
Once a price is agreed or adjudicated, a new lease can be prepared and registered with the Land Registry.
It is usually the case that lease extension requests will be concluded by negotiation.
Lease extension can be a useful tool for Executors to use to maximise the value of the Estate. Executors are able to apply for a lease extension on behalf of a deceased tenant.
How much will it cost?
Our charges for advising on a lease extension range from £750 plus VAT to £900 plus VAT. You will also need a professional valuation of the extension – a report is likely to cost in the region of £400 plus VAT to £600 plus VAT.
If an application to the First-Tier tribunal is necessary our costs are charged on the basis of the time incurred.
For further information about extending your lease or dealing with a Notice served by a tenant contact our expert team on 0800 088 6004.
Additional information is on the Lease Advice website.