The question of how to get a lease extension is one shrouded in mystery for many people, but extending the lease could be immensely beneficial if only people knew how to initiate the process and account for the costs involved. So this article breaks down the process step-by-step in order that you have all the key details you need to make an informed decision in the future.
If you have owned a property for more than two years, with a lease longer than 21 years (long lease), you may compel your landlord to grant you a lease extension. You can ask your landlord to extend the lease at any time.
Did you know this could give you an additional 90 years on top of your lease? That’s for a flat, whilst the figure for a house is 50 years as there are different rules for different types of property. And then, having been granted an extension, you will effectively have to pay no ground rent. This peppercorn ground rent, to all intents and purposes, means you pay nothing.
Does this sound too good to be true? Where is the catch and what are the costs? You can search for a lease extension calculator online to give you an estimate, but the costs depend on several variables such as the value of the property, the length of the lease, and the ground rent currently payable. In addition, the cost of extending a lease may double once marriage value comes into force i.e. if there are fewer than 80 years left on the lease. If a lease is approaching 80 years it is therefore vital that you commence the statutory process immediately in order to avoid the increased cost because the valuation date freezes when you start the legal process.
You will require surveyors to produce a lease extension valuation and negotiate the premium to be paid with the landlord’s representative. A solicitor will then be needed to draft a Section 42 claim notice which will be served on the landlord. The landlord may inspect the property to create his own valuation, then serve a counter offer. Terms of the new lease are then negotiated by the solicitors and, in the case of a dispute, either party can appeal to the First Tier Tribunal within 6 months of the counter notice. Terms are agreed, the new lease is signed and funds are transferred.