Extending your flat’s lease can make it easier to sell and increase its value. Our lease extension solicitors will guide you through the legal process.
What is a lease extension?
When you buy a leasehold property, you are buying the remaining years on the original lease granted by the original freeholder (landlord) to the first leaseholder (flat owner) i.e. the first person who bought the lease from new. From that date, the lease continues to reduce in length.
A successful lease extension will require the expertise of a specialist lease extension solicitor, as there are a number of complex criteria to fulfil. Trethowans has experienced leasehold enfranchisement solicitors regularly carrying out lease extensions for flats based across all our office locations in Salisbury, Southampton, Poole, Bournemouth, Winchester and London, who able to provide legal assistance wherever and whenever you need us.
Is it time to extend my lease?
The shorter the lease becomes, the more difficulties you will find you have in selling it. You should think about extending a lease with less than 90 years left to run. If you do not know how long you have left to run, let us know and we will help you check this.
Once the remaining lease term drops below 80 years, the lease premium (the purchase price payable to the landlord) becomes more expensive. For this reason, it is becoming more common that mortgage lenders or buyers will want a lease with 85 years or less left to run to be extended.
When the remaining lease term drops below 80 years, buyers may also want a lease extension carried out before they purchase the property – if their solicitor is prudent, the buyer will have been warned that a lease extension is likely to be necessary during their ownership, at a cost to them.
Mortgage lenders do not like to lend on ‘short’ leases. When a lease drops below 70 years lenders may refuse to lend on the property; it can make it very difficult to sell your property, as you are then limited to cash buyers who are happy to take on the property without a lease extension – such buyers are also likely to want a significant reduction in the purchase price in the knowledge they will have to pay for the lease extension themselves in the future.
As your lease becomes shorter, it will also become more expensive to extend your lease. It is therefore more cost effective to extend your lease at your earliest opportunity. Our lease extension solicitors will be able to advise you further – don’t hesitate to contact Laura Russell for further information and advice regarding your lease.
Statutory Lease Extensions
The Leasehold Reform Housing and Urban Development Act 1993 enables most flat owners who have been the registered owner of their leasehold property for at least two years to compel their landlord to grant them a lease extension. The terms of the lease extension are fixed, so that you receive an extra 90 years on top of your remaining lease term, and that the ground rent becomes a ‘peppercorn’ (this is a legal way of recording a nil ground rent).
The process is quite onerous and it is vital that you seek expert legal advice from a an experienced specialist lease extension enfranchisement solicitor.
Please see contact Laura Russell to discuss your particular circumstances further and obtain our statutory lease extension information sheet for further information on the statutory process and costs involved.
Informal Lease Extensions
Unlike statutory lease extensions, there are no minimum ownership requirements for an informal lease extension.
An informal lease extension is one in which the parties negotiate the terms. The landlord is not obliged to grant you a lease extension in this way and, much like a house purchase, until the final documentation is signed and completed, both parties are at liberty to withdraw from the transaction.
The advantage, however, is that you are able to ‘top up’ your lease; for example if your lease is currently at 83 years remaining, you may want to simply add another 16 years to bring the term back up to 99 years in order to sell your property. Your freeholder can also retain a ground rent in an informal lease extension – but you should be wary if they try to increase it.
By buying a shorter term and allowing the freeholder to keep a ground rent income, you are often able to pay less of a premium for your lease extension, and the legal costs will usually be lower compared to the statutory option.
You will require individual specialist advice and separate costs estimates for more complex situations such as having an absent/missing/insolvent freeholder, were you are acting under a Grant of Probate, or where you want to assign the benefit of a Statutory Notice to your buyers.
Please note that this is not exhaustive advice on lease extensions, and you should discuss your individual circumstances with one of our specialist lease extension solicitors. Contact Laura Russell, experienced leasehold enfranchisement solicitor, for further information.
Why choose our lease extension solicitors?
Our lease extension solicitors have years of experience helping clients to successfully apply for a lease extension, both informally and using the formal statutory method.
Trethowans LLP are certified members of ALEP (the Association of Leasehold Enfranchisement Practitioners), meaning that Trethowans is recognised as a proven specialist in all matters relating to leasehold enfranchisement, including lease extensions.
When working alongside our lease extension lawyers, you can expect first-class legal advice and guidance. We take the time to get to know your individual requirements before suggesting the very best course of action for you. Don’t hesitate to contact Laura Russell, head of the leasehold enfranchisement team here at Trethowans, to discuss the terms of your lease extension further. Our law firm has offices located in Poole, Bournemouth, Winchester, Salisbury, Southampton and London to meet your requirements.