Property Conveyancing
Lease extension solicitors – expert advice
Maximise the value of your property by extending your lease. By acting early, you can save money and significantly increase the value of your home.
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Increase the value of your home with a lease extension
What is a lease extension and how does it work?
When you own a leasehold property, its value can depreciate over time. Once your lease has gone below 90 years, it’s likely the asking price of your property will fall. Once it has gone below 80 years, few mortgage lenders will lend against your property, limiting the purchase to cash buyers only.
A lease extension is a legal right for property owners to extend the period of their lease. For flats this is an addition of 90 years to the remaining term and for houses, 50 years. It also has the advantage of setting the ground rent to zero, or “a peppercorn rent”.
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The importance of taking action on lease extensions
There are several reasons why it’s important to take action on extending your lease:
- as the lease gets shorter, your property loses value.
- the lease extension process can be lengthy, and delay could impact the value of your home and make lease extension more expensive.
- if your lease falls below 80 years, you’ll be charged a “marriage value” for extending. This is a penalty fee paid to the freeholder, amounting to 50% of the increase in the property value. With an 81 year lease the marriage value is 0%.
- for leases of 80 years or less, the property becomes harder to sell because mortgage lenders won’t lend against it.
How to qualify for statutory lease extension
Previously, leaseholders would have to wait two years before qualifying for a statutory lease extension, which is no longer the case. You can now start the extension process as soon as you are the registered owner of the property. There are other conditions, however:
- your lease must have been granted for a term of more than 21 years
- you don’t qualify if the landlord is a charitable housing trust
- you generally don’t qualify if you bought your home through a shared ownership scheme and you have not achieved 100% ownership
- business or commercial leases do not qualify
Voluntary lease extension
If you don’t want to go down the statutory route, then you can extend the lease through an informal negotiation with the freeholder. The advantage is that this process can be quicker, but the freeholder does not have to agree, and you don’t have the legal backing of statutory time limits and fair-pricing tribunals.
How much does a lease extension cost?
Costs vary and should be checked with your professional adviser before you proceed. This could amount to £20,000. However, these costs should be covered by the increase in the value of your property. The costs you have to cover include:
- the premium – this is the amount paid to the freeholder based on the value of the property and the length of the lease
- your solicitor’s and surveyor’s/valuer’s fees
- the freeholder’s legal and valuation fees (which you are obliged to cover under law)
- land registry and administrations fees
Get expert legal advice
Extending your lease can be a complex and expensive process, but it will significantly increase the value of your home. Whether you decide to go for statutory or informal lease extension, it’s important to have a knowledgeable legal adviser on your side to take you through the whole process. The legal experts in our property team have years of experience in lease extension and will ensure your legal rights are protected and that you don’t pay too much. They will also take care of registration and other formalities. We will keep you informed at all times and overcome any issues that arise.
Supporting you through the lease extension process
Our property team will help you with the following:
- advice on the timing of when you should get your lease extension process underway
- estimated cost of lease extension
- guide you through the process from start to finish
- financial advice on loans, mortgages and investments
Legal and financial advice under one roof
Tees is a top-tier Legal 500 firm offering joined-up legal and financial services. We have our own independent financial advisers (IFAs), who work closely with our lawyers.
Our advisers provide holistic financial planning, and as we are not connected to any one provider, we can offer a whole-of-market approach for the range of products we can advise on. We can also give independent advice for a whole range of insurance products to protect you and your family. Our IFAs are regulated and authorised by the Financial Conduct Authority, which means we’re accountable for the advice we give.
Get in touch today, we’re here to help
Our clients range from high-net-worth individuals with complex finances to those with more straightforward needs. We also specialise in the agricultural sector, having a sound understanding of the relationship between business and personal needs.
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Remortgaging FAQs
Do I need a solicitor to remortgage?
In most cases, your new mortgage lender will require legal work to be carried out before the new mortgage can be registered. Some lenders offer free legal services for certain remortgage products, while others allow you to choose your own solicitor.
Your lender will confirm its requirements when your offer is approved.
How long does a remortgage take?
The timescale can vary depending on the lender, the property and whether any issues are identified during the legal checks. A straightforward remortgage can often be completed relatively quickly, but it is sensible to allow several weeks, especially if the lender requires searches to be carried out
If your current mortgage deal is ending, you should ensure you start the process early enough to allow time for the new mortgage and legal work to be completed.
Can I remortgage with the same lender?
Yes. You may be able to switch to a new mortgage product with your existing lender without changing lenders. This is sometimes referred to as a product transfer.
If you are changing your mortgage product but not taking out a new mortgage with a different lender, the legal requirements may be different. Your lender or mortgage adviser can explain what is required.
Can I remortgage before my current mortgage ends?
You may be able to, but your existing mortgage could include an early repayment charge. You should check the terms of your current mortgage and consider whether the potential benefits of remortgaging outweigh the costs of an early repayment charge as they can be significant.
Can I borrow more when I remortgage?
Depending on your circumstances and the lender’s criteria, you may be able to increase the amount you borrow when you remortgage. This is sometimes referred to as additional borrowing or capital raising.
Your mortgage adviser or lender can advise whether you are eligible. If the additional borrowing is for a specific purpose, there may also be legal considerations to take into account.
Can I remortgage if I have a leasehold property?
Yes. Leasehold properties can be remortgaged, although your lender may require additional information about the lease. Such re-mortgages can take significantly longer than freehold properties, as requirements of landlords or managing agents also need to be ascertained. In addition, if the lease is not satisfactory to a lender, a deed of variation may be required.
We will check the title and lease and deal with any legal requirements your lender has.
Can I remortgage and transfer ownership at the same time?
Yes. A remortgage can be combined with a transfer of equity where appropriate. This might be necessary if someone is being added to or removed from the property’s ownership.
There can be tax, legal and mortgage implications, so we recommend taking advice before making any changes to ownership.
What happens to my old mortgage when I remortgage?
When your remortgage completes, the new mortgage funds are generally used to repay your existing mortgage. Your solicitor will obtain a redemption statement from your existing lender and arrange repayment as part of the completion process.
The existing lender’s charge is then removed from the title usually electronically by the existing lender and the new lender’s charge is registered which we would deal with also
Will I need property searches when I remortgage?
This depends on your lender and the circumstances of the remortgage. Some lenders require searches, while others may accept alternative forms of protection or existing information such as search indemnity insurance
We will confirm what is required for your particular remortgage.
What documents will I need to provide?
The documents required will depend on your lender and circumstances. We may need identification, information about your existing mortgage and property, and documents relating to any changes in ownership.
We will tell you what is required at the start of the process so you can provide the information promptly.
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Declaration of Trust
If you own a share in a house, a declaration of trust is a document that says how much you’ll get when it’s sold.
Transfer of Property Ownership
A transfer of equity is the legal process to change the ownership of a property by adding or removing one or more people to the legal register.
