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extending your lease

Step by step guide to extending your lease

Extending your lease can be a long and complicated process, and remember that it's in the professionals' interest to drag things out - so take charge of every stage and stay one step ahead of the game by reading our guide.

Before I start, how much will it cost me?

It depends on the value of the property, the number of years left on the lease, the annual ground rent, the value of improvements done to the property paid by the leaseholder and external factors such as expected rate of returns on investments.

It is a complex calculation, but also a subjective one. Like trying to define the value of a house, there is not necessarily a “right” answer to the value of a lease extension, which means it will be subject to negotiation – or decision by a tribunal.

Are you thinking about extending your lease? Become a member of the HomeOwners Alliance to discuss your options with our friendly Home Helpline team

Can I calculate the cost myself?

You can get a rough idea of how much it will cost using our lease extension calculator. But unless the amount is below a few thousand pounds, it is worth paying a valuation surveyor to calculate it for you. This will cost you a few hundred pounds, but will probably save you from paying over the odds.

What other costs do I have to pay?

On top of the cost of the lease extension, you have to pay:

  • Legal costs (a solicitor)
  • Valuation costs (a surveyor)
  • Negotiation costs (normally done by the surveyor)
  • Land Registry fees

Be aware that if you start the formal statutory lease extension process (see below), then you are required by law to pay both your legal and valuation costs, and that of the freeholder – doubling them. You may well not get that for under £1000. However, if you enter into informal negotiations, you only have to pay the costs of your own negotiator (the freeholder has to pay theirs).

Are you thinking about extending your lease? Become a member of the HomeOwners Alliance to discuss your options with our friendly Home Helpline team

OK, so what do I need to do?

  • Step 1 – Speak to your freeholder. You may find he or she is happy to negotiate informally and willing to consider your offer straight off, without having to involve anyone else. This may save you time and money and it could help you reach a lower price on the lease. But beware – statutory lease extensions remove the requirements to pay ground rent. Informal extensions will probably include ground rent, which could make the lease a lot more expensive to extend again in the future.
  • Step 2 – Find a valuation surveyor. You need to find a valuation surveyor with a good understanding of both the legislation and the local property market. So, although surveyors based outside of the city centres can be cheaper, pay the extra for a local expert if you live in a city.
  • The Leasehold Advisory Service Practioner’s Directory can be a useful starting point for finding a local surveyor or become a member of the HomeOwners Alliance and we can guide you. Do your own research – ask friends, speak to estate agents you’ve used in the past and search the internet for someone you trust.
  • Step 3 – Find a solicitor. This is interchangeable with Step 2. If you know of a good solicitor, go to them first and they should be able to recommend a valuation surveyor and vice versa.
  • The Leasehold Advisory Service can help you find a solicitor or become a member of the HomeOwners Alliance and we can guide you. Again, it is a good idea to research and ask around.
  • Step 4 – Make a formal offer. If the leaseholder didn’t accept your informal offer, you will have to serve tenants’ notice – your solicitor will able to take care of this.
  • Step 5 – Pay the deposit if one is required by the landlord. This will either be £250, or 10% of the lease cost in the tenants’ notice, if that exceeds £250.  If the landlord does require a deposit, this will have to be paid within 14 days, so it’s important to have this money readily available.
  • Step 6 – Negotiate a price

If the freeholder doesn’t accept the amount you’ve offered you will have to negotiate. Then if you still can’t come to an agreement, you will have to apply to the First Tier Tribunal (Property Chamber), but tribunals can be time-consuming and expensive, so it’s best to avoid this if you can.

How long will all of that take?

The process normally takes from three to 12 months, and it can be made quicker by efficient valuers, solicitors and other professional help, so choose these people wisely.

Is it worth trying to buy the freehold instead?

It could be worth buying the freehold on your home so that you own it outright. But there are complicated legal procedures and legal costs involved in this process and you will have to get over half of all the leaseholders to agree, which could be difficult if, for example, you live in a building divided into apartments.

Are you thinking about extending your lease? Become a member of the HomeOwners Alliance to discuss your options with our friendly Home Helpline team

 

 


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