The Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”) provides leaseholders with the right to extend their lease; subject to certain qualifying criteria being met.
In brief, the Act provides the leaseholder with a right to extend the lease term by a further 90 years and extinguishes the ground rent. This is known as a statutory lease extension. The right is one of compulsion, as historically a Freeholder could demand a premium at its discretion or refuse a lease extension carte blanche.
Below is a step-by step guide on extending your residential lease:
1. Check you’re an eligible leaseholder. Your original lease must have been longer than 21 years and you must have owned the property for two years or more.
2. Ensure you have the funds to complete the process, which can cost from several thousand pounds.
3. Find out who owns the freehold and if no freeholder can be found apply for a vesting order.
4. Appoint a valuation surveyor with expert knowledge of both leasehold and the local property market. They should be a member of RICS and ideally ALEP.
5. Appoint a solicitor with experience in extending a lease and who is a member of ALEP.
6. Consider whether to approach your freeholder personally to discuss extending your lease or get your surveyor or solicitor to do this for you.
7. If your freeholder is willing to negotiate and you reach an agreement easily, make an informal offer.
8. If your freeholder accepted your informal offer, you may now make a formal offer. (If they did not accept your informal offer, your solicitor will need to serve a Section 42 Notice).
9. The freeholder may now require you to pay a deposit within 14 days. This will be 10% of the cost of the lease or £250, whichever is higher.
10. The freeholder will serve a counter notice (Section 45), either accepting your offer, proposing alternative terms or rejecting your request.
11. If no agreement is reached, you can seek help from the Leasehold Advisory Service.
12. You can apply to the First Tier Tribunal or Leasehold Valuation Tribunal. Unfortunately, this could turn out to be a lengthy and expensive process, see http://decisions.lease-advice.org/ for more information on tribunals
13. If you have a mortgage on the property, your lender will need to approve the lease extension.
14. Your solicitor will finalise the lease extension.
If you are looking to extend you lease please speak to our Lease Extensions Team to find out more.