Leasehold enfranchisement is the legal right given to a leaseholder to extend a lease or buy the freehold or a share of it; collective enfranchisement. It can be complex and rather time consuming and is a specialist area that requires the expertise of qualified leasehold extension solicitors to provide the best guidance and support.
When discussing leasehold properties, we refer to one where you own the property itself, but you lease the land it sits on from a landlord, known as the freeholder. The lease will specify the length of time you have the right to occupy the property, and the amount of ground rent you must pay to the freeholder each year.
In this post, we will explore some frequently asked questions on property leases with a focus on when you should consider extending your lease and how you go about doing so.
When Should you Extend your Lease?
As a leaseholder, if you have owned your property for at least two years and the original lease was for a term of more than 21 years, then you have a right to a lease extension. However, there are several factors to consider before deciding whether to do so;
- What term is remaining on the current lease? If your current lease is below 95 years, this makes good financial sense, because as a lease gets shorter the value of the lease decreases. And once it falls below 80 years the costs of extending it significantly increase.
- Will it increase the value of your property? A longer lease is generally seen as more valuable than a shorter lease, so extending your lease can help to increase the value of your property. This is especially important if you are planning to sell your property in the future.
- Will it be easier to get a mortgage? Some mortgage lenders are reluctant to lend on properties with short leases, so extending your lease can make it easier to get a mortgage if you need one.
- Are you planning on moving in the near future? Extending your lease will involve some upfront costs, so it may not be worth it if you are not planning to stay in the property for long but this will depend on the current length of your lease.
How to Extend your Lease for Leasehold Properties
Leaseholders can either extend their leases under the law if they meet certain criteria, or by asking the freeholder to see whether they are willing to negotiate a lease extension informally. There are a few steps you need to take if you choose to extend your lease;
Confirm your eligibility. The first step is to check your lease to see if you are eligible to extend it. In most cases, you will need to have owned the property for at least two years before you can extend the lease under the relevant legislation.
Engage with a specialist in leasehold enfranchisement for advice. This is vital to ensure an accurate process and your own peace of mind.
Your specialist will be able to advise you on the pros and cons of extending the lease voluntarily and under the Act.
Obtain a valuation from a specialist surveyor who will advise you on the likely premium you will have to pay for the lease extension.
Serve a Section 42 Notice under the Leasehold Reform Housing and Urban Development Act or seek to agree terms voluntarily.
Once terms are agreed, pay the extension premium and costs. If the freeholder agrees to extend the lease, you will need to pay a premium and their valuation and legal costs. The amount of the extension premium will vary depending on the length of the lease, the value of the property, and the current ground rent.
Complete legal documents. Entrust your assigned specialist to complete the extension, notifying all required parties.
Can you Extend a Lease without Expert Support?
Whilst you can attempt to extend your lease directly with the freeholder, there are various pitfalls that you’ll need to be aware of and we would always recommend engaging with specialists in leasehold enfranchisement for advice.
Their training and previous experience will ensure you don’t end up making any mistakes or failing to complete all elements of the process correctly and that you don’t end up incurring more costs or more importantly being refused the right to extend altogether.
By working with the team at Gillhams Solicitors, we’ll make sure you’re eligible, guide you through the calculation and negotiations for a fair premium, and we’ll always ensure that statutory documentation and notices are filed on time.
Would you Like to Learn More?
Extending your property lease can be a proactive way to protect your investment and make it easier to sell your property in the future. However, it is important to weigh up the costs and benefits before deciding whether to extend the lease. If you are considering extending your lease, it is important to get professional advice from a solicitor or property expert.
As leasehold enfranchisement specialists, Gillhams Solicitors will take you calmly and systematically through the process of extending your lease allowing you to relax knowing that the value of your home is fully protected. For legal advice on any property related matter, complete this contact form, email us at email@example.com or call us on 020 8965 4266.