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.
We have offices across Cambridgeshire, Essex and Hertfordshire, but we can help you wherever you are in England and Wales.
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