Give your flat a new lease of life.
If you own a flat the chances are that you have a lease which would have originally been granted for a term of 99 years, 125 years or 999 years. As time passes the value of your flat reduces as the lease gets shorter. Under the Leasehold Reform, Housing & Urban Development Act 1993 (as amended) residential long leaseholders have the right to acquire an extension to their existing lease (lease extension).
What are the benefits of getting a lease extension?
- Instantly increase the value of your flat
- No more ground rent
- Easier to sell your flat
- Easier to get a re-mortgage
What can you do about it?
To exercise your right to a lease extension you need to become “qualifying leaseholders” which means you (i) you need to have owned your flat for a minimum of 2 years and (ii) your original lease was granted for a term of at least 21 years. For example, if there are presently 72 years remaining, you can obtain an extension to 162 years. In addition your ground rent is bought down to zero e.g. if previously your ground rent is ￡150 yearly, the new ground rent will be zero.
Please note the law provides for leaseholders to be granted a lease extension for 90 years, it does not however restrict leaseholders and freeholders freely negotiating terms of a lease extension which is for or less than 90 years and with or without a ground rent.
How much will it cost?
A good starting point will be to appoint a surveyor to value your property for the purpose of the lease extension. The surveyor will provide you with their opinion of a reasonable premium to pay the freeholder for a lease extension. Valuation fees will range from ￡600 - ￡1,200 plus VAT, depending on the location, size and value of the flat.
Next stage is to appoint a solicitor well versed in dealing with lease extension. Using the premium stated in your surveyors report, your solicitor will serve the relevant notices on the freeholder to exercise your right to a lease extension. Your solicitor will also deal with finalising the legal documentation and new lease once the premium and terms of the new lease have been agreed. Legal fees for lease extensions is usually in the range of ￡800 - ￡2,000 plus VAT, depending on the amount of work involved.
Beyond providing you with a valuation, you may wish to appoint your surveyor to negotiate with your freeholder or their surveyor the premium payable for the lease extension. Fees for negotiation will be in addition to valuation fees and are usually based on an hourly rate. On average negotiations will take anywhere between 1-6 hours.
In addition to paying the lease extension premium and your legal and valuer fees, the leaseholder has to pay the freeholder’s reasonable valuation and legal fees.