Lease Extension – what is the process?
When you’re looking to exercise your lease extension rights, you need to be aware that of applying for an extended lease is complex and there are a number of tricky aspects – not least a very rigid timetable which you must stick to if your application is to succeed.
1. The first thing you should do is hire specialist lease extension solicitors to deal with the application for you. You may instruct your solicitor to approach your freeholder informally to attempt to agree a private lease extension, but be aware of the risks of doing so.
2. You will then need to instruct a surveyor who specialises in lease extensions. Their job will be to value your proposed lease extension so you can try to agree a price with your landlord. We can help you here by putting you in touch with a specialist surveyor local to where you live and by instructing them on your behalf.
3. Next your solicitor will work with you to collect all the necessary information [such as the valuation report, a copy of your lease, the identity and contact details of the relevant landlord along with proof of your eligibility for a lease extension]
4. In the absence of an informal lease extension, the next step is serving a formal notice on your landlord (or the freeholder, if they are not the same person) – to inform them that you intend exercising your lease extension rights. If you are unable to agree on a price for your lease extension with your landlord, then you will need to apply to a leasehold valuation tribunal to determine the price that you will pay
5. After you have served that formal Notice [known as a section 42 notice] on your landlord forming them of your intention to extend your lease, your landlord then has 21 days to respond to you and request any further information. They can also range for their own valuation on your property as long as they give you three days’ notice before doing so. Furthermore, your landlord is required to serve a Counter-Notice on you by the date specified in your original Notice (your solicitor will be able to advise you on this) to either accept or reject your application to extend your lease
6. If you and your freeholder are unable to agree on a price or on another aspect of the leasehold extension, you will enter into a statutory negotiation period. This will last for at least two months, after which you can apply to a leasehold valuation tribunal to settle any outstanding issues between you and the freeholder. You must make this application within six months of receiving the Counter Notice.
Lease Extension – the marriage value
One of the most important time considerations when considering an exercise of your lease extension rights is if your lease is little more than 80 years left to run. The reason this is so important is that the price you have to pay your landlord to extend your lease significantly increases as soon as the remaining term of your lease dips below eighty years. Once you have less than 80 years left to run on your lease, your landlord can charge an additional premium for your lease extension – this is known as the “marriage value”. This is the increase in value of the flat after the lease extension has been completed. This ‘profit’ element is only achievable because the freeholder has agreed to grant the lease extension and so the freeholder is entitled to 50% of the profit.
Apply for your lease extension before your lease term drops below 80 years
It is particularly important, therefore, to make a formal application for a lease extension if the remaining term of your lease is in danger of slipping below that eighty year period. Sadly some unscrupulous landlords play the system – by starting informal negotiations with tenants whose leases are approaching the critical 80 year period, only to drag their heels until the remaining term dips below 80 years – and then to withdraw any corporation, requiring a formal application and enabling the landlord to charge the additional marriage value. Tricks such this are exactly why appointing a specialist lease extension solicitor is so important.
Is there anything that could delay my lease extension?
Yes, there are a number of factors that can delay completion of your lease extension of location, including the following;.
- If your application is a statutory one, then you and your freeholder are going to be limited by the procedural timetable – so expect your lease extension to take the good six months
- Slow freeholders – if you’re application is a voluntary rather than a formal one, then you are relying entirely on the goodwill of your freeholder. What’s more, unlike the formal route, where as soon as you get your section 42 notice application in, the term of your lease stops declining, with a voluntary lease extension, your lease term is getting shorter day by day.
- Slow solicitors. In our experience, far too many solicitors struggle with understanding exactly how lease extensions work – especially if you are going down the statutory route. And as a result of them having limited experience, they can sometimes take a lot longer than they should – or argue unnecessary points.That’s why you should always ask your solicitor how many lease extensions they get through every year.
- Finally, be aware that to extend your lease you will need a Land Registry application which will require the consent of your lender. Your lender’s consent could take a few weeks to be forthcoming.
Thinking of exercising your Lease Extension Rights? Contact us today
Wherever your property is in England and Wales, our specialists can help. For practical advice you can rely on, get in touch with our lease extension rights team today
- Call our team today on FREEPHONE 0800 1404544, or
- Send us an email using the contact form below
Comments or questions are welcome.