Are you thinking about extending the lease on your flat but unsure as to how it all works? Here’s everything you need to know.
To understand the process of lease extensions it’s best to break it down into phases.
Phase 1: Are you eligible?
In order to be eligible for a lease extension you need:
- To have owned a long lease for at least 2 years.
- The lease must have had a term of over 21 years when it was originally granted.
- The landlord is not a charitable housing trust whereby your flat is included as part of the charity work.
- The lease is a business or commercial lease.
If you fit the above criteria, then you are eligible to apply for a lease extension!
Phase 2: the process
There are two routes within which you can apply to extend your lease: an ‘Informal route’ or a ‘formal route’.
This takes the form of a negotiation with the competent landlord. As our client, we would negotiate with the Landlord directly or via their legal representation on your behalf. As in any negotiation, you can make an offer as to how long you want to extend the lease, the price of the premium and the ground rent.
Formal statutory route:
This would require you to serve a Section 42 Leasehold Reform, Housing and Urban Development Act 1993 Notice (Section 42 Notice) upon the landlord. A Section 42 notice allows for 90 years to be added to the remaining term of the lease and a zero (or ‘Peppercorn’) ground rent. As our client, we would work with you to draw up the section 42 notice and serve it upon the landlord, stipulating the date at which they must respond.
In the statutory route, the premium for the extension is calculated by a surveyor valuing the property who then suggests a suitable premium based on the valuation of the property. You will need to appoint a surveyor to do this and then send the report on to us to draw up the Section 42 notice.
Once the Section 42 notice has been served, the Landlord has 2 months to respond by either accepting your proposal or by serving a section 45 counter offer.
In the event that an agreement cannot be reached, either party can apply to a Leasehold Valuation Tribunal in order to determine the premium and the terms.
Phase 3: Completion
Once the terms of the lease extension have been agreed, the new lease will be drawn up by the Landlord’s solicitors.
This will then need to be signed by both parties.
You will also need to make payment of the premium and fees to allow us to finalise completion.
The final step will be for us to register the new lease at the Land Registry. If there is a legal charge against your property, a mortgage for example, we would need to contact the relevant bank to obtain the lender’s consent. Generally the lender will provide a ‘Deed of Substituted Security” to allow them to transfer their charge over to the new lease. This will need to be signed by you and the bank, and we will have to register this at the Land Registry along with the new lease.
Once this is done, your lease extension will be complete!
What about timescale?
In the absence of needing to go to a Leasehold Valuation Tribunal, lease extensions will generally take around 4-12 months, however this timeframe can’t always be guaranteed.
What about costs?
Our fees are generally £1250 + VAT to deal with your lease extension.
You as the leaseholder will also need to pay for the Landlord’s legal and surveyor’s costs, as well as the agreed upon premium.
If you are thinking about applying for a lease extension, don’t hesitate to contact us here at Giles Wilson
You can email me directly - email@example.com or call us on 01702 477106.