How to Extend the Lease on Your Flat

Statutory Lease Extensions &

Freehold Enfranchisement Tips

Introduction

If you purchased your flat on leasehold, you will need to be prepared for the eventual need for a statutory lease extension. The shorter your lease is, the more your flat will drop in value. So, this is particularly important if you are planning to sell your property down the line. You may also want to leave your property behind to your family and ensure it is of high enough value to enhance their lives.

Here are some of the basics that will help guide you through the process of extending the lease on your flat. Including the reasons why you need to do this and a brief overview of the fees that will be incurred.

Your Dream Flat

Approximately 2 million people in the UK

have a flat on leasehold, so I ask that you

picture this scenario:

You are loving your new leasehold flat and

after two years you are now settled without

yet having to fork out any expenses on

maintenance or repairs. What could

possibly go wrong?

Well, the answer to this depends on the

length of your lease. If you have one that is

95 years or more then you are sitting pretty

for now but any less and you could be in

trouble.

The shorter the lease the lower the value of

your property – this could also be the reason

you bagged a bargain! If the lease runs out

the property reverts back to the freeholder.

80 Years = ££££££

The most important pinnacle for you to

consider is the 80 year point. As soon

as your lease has less than 80 years left

it is much more expensive to have it

renewed.

Once your lease has 80 years or less

left on it, it becomes much, much more

expensive to renew.

This is because if you extend at this

point, in addition to paying the lease

extension, you will also be liable to pay

50% of the flats ‘marriage value’.

Apply for your lease extension before you think you need to.

The longer you leave it the more expensive it will be. Mike

Tibbatts of Mike Tibbatts & Co said:

"Now is always the right time to get a statutory lease

extension. Every day you don't, you are handing more value

over to your freeholder."

TopTip

Can I Extend My Lease?

Not everyone is able to extend their lease,

which is why it is important to be sure you

can before you even purchase your property.

If you are able to extend it then you also need

to be aware that it can take a long time.

The basic rules for allowing lease extensions

include the requirement that:

• You have owned the property for two years

• Your lease has at least 21 years left to run

If you meet the above criteria then it is likely that you

are entitled to a 90-year extension, however your

freeholder may agree to a different amount of time.

Circumstances When You Can’t Extend Your LeaseThese are the instances that may mean

you are NOT able to extend your lease:

• The majority of leaseholders have

already applied to buy the freehold

• If the lease has already come to an end

• If the freeholder wishes to rebuild or

redevelop the property

• If you sublet your home on a lease of

21 years or more

• The lease was granted for less than 21

years

• The freeholder is a charitable housing

trust or it is a National Trust property

It is important to seek advice from a qualified professional

to guide you through the process and provide you with

‘current’ advice. I also recommend you look further into

freehold enfranchisement, which will also help you

understand your rights.

TopTip

Next Steps: The Legal Bit

If you have established that you are definitely

eligible to extend your lease then you now need

to get the right qualified people to help guide

you through the process. You will need a:

• Solicitor

• Licensed Conveyancer

Do your research, work from recommendations

when you can and get several quotes until you

find the right one for you.

Ask about fixed fees. If the freeholder delays the

process it could cost you more, unless the solicitor

offers a fixed fee.

TopTip

What is the Lease Value?

Ask for a quote from the conveyancer. They

will use the valuation formula set out by the

Leasehold Reform Housing and

Redevelopment Act 1993. There are also

plenty of lease extension calculators available

online.

I would recommend that you ask an experienced

conveyancer to calculate the lease value of your

property for you. The calculation can be

complicated and you want to ensure it is accurate.

TopTip

How Much Does it Cost?

It is important to fully understand all of the costs

involved with your statutory lease extension. The

various elements that you need to consider

include:

• Legal fees

• The Freeholder’s legal fees

• Any lease extension negotiations with the

landlord

• Valuation fees, which can be between £400-

£900

• Stamp duty, which is potentially payable for

any properties worth more than £125,000 Check out this lease extension case study:

https://www.youtube.com/watch?feature=player_

embedded&v=G2-pQEkAZLo

TopTip

Notice to the FreeholderThe freeholder will eventually need to be given notice. They then have 2 months to respond and decide if they want to give a counter notice.

In most cases the freeholder simply agrees and promptly returns with a counter notice. However, there is a chance the freeholder may want to try for a higher price. If this is the case any further negotiation could result in further legal fees so you may opt to simply go with the higher price.

The process of extending your lease can take a long time. It could be just 2 months or it could take up to 12 months. However, the process can save you a substantial amount of money, so it will be worth it once you get that all important lease extended. Not only will it save you money by doing it early, you will also increase the value of your property and avoid paying ground rent.

I hope my Slideshare helped you with your plans to

extend the lease on your flat. Good luck and please

follow me on Twitter @EdwardPhelan1 for more

updates.

ThankYou