Extending your Lease

  1. Why Extend your Lease?


    Many mortgage lenders will require any Lease upon which they are to make a loan to have at least 55 or 60 years left to run. There are valuers who will add at least 10 years to that period and accordingly if your Lease has 70 years or less left to run, it is already at a point where some valuers will regard it as being at the limit of saleability.


    You should also be aware that the price for the Lease extension will increase once the term drops below 80 years so if your Lease has 80 – 85 years left to run, you may also want to consider extending..


    2.         How to Extend your Lease


    For a tenant to qualify, he or she must have owned the Property for at least 2 years. The tenant will serve a notice claiming a lease extension. The Landlord will be entitled to be paid a fair price for the grant of the new Lease and he is entitled to demand payment of his own Solicitor’s and Surveyor’s fees.  When the Landlord receives the Notice, he can immediately claim payment of a 10% deposit based on the premium proposed in the Notice with a minimum sum of £250.
     

    The price will be calculated as at the date of the Notice


    The Landlord must be given two months within which to reply to the initial Notice.  There is then a further 4 month window in which either party may apply to Court to fix the price if agreement cannot be reached


    When a price is agreed the Landlord is obliged to grant a term of 90 years plus the present unexpired term at “a peppercorn” rent (meaning that no money is payable in respect of ground rent).  The terms in the original Lease should be repeated in the new one although certain modifications are permissible, particularly if there were clauses missing from the Lease that might be included in the grant of a modern Lease without which the Lease could be regarded as defective.
    It is important to instruct a surveyor to assist with the negotiations over the values involved.  The Surveyor will give the Solicitor the information the Solicitor needs for the process.


    Before you commence the process you will need to set aside enough money for your Solicitor and surveyor, the Landlord’s costs, and also ensure that you will have available the purchase monies and costs for the new Lease if you should go through with the transaction.  As mentioned, some of that money such as the initial deposit may be required very quickly after the Notice is served. We will be able to give you estimates to enable you to budget appropriately


    The legislation that governs these procedures is detailed and covers other related aspects and therefore the above guidance notes must not be regarded as a complete picture.  Before taking any action you should obtain legal advice specific to your circumstances.
     

    3.         What other options are available?  
    You can take an informal approach – ask your Landlord to quote terms, accept the terms and extend the Lease accordingly.  This is likely to be a quicker process with lower legal and surveyor’s costs, but overall you are likely to pay a far higher price.

     

    4.         How can we help?

     

    One of the questions we are first asked is “How much will the lease extension cost?.” There is no way to answer that question other than to instruct a surveyor to give a valuation. We work with a local surveyor known for his expertise in these matters, and can arrange that valuation for you. We can also give you a detailed estimate of the other costs likely to be involved. For more details of our lease extension package please give us a call.

    Please note: 

    1.  This information is provided as a general guide only and you should take legal advice relevant to your situation before seeking to extend your lease.
    Legislation exists that allows tenants to collectively acquire the Freehold of their estate under some circumstances. If a number of leases need to be extended this can be a more cost effective route

 

Contact

Ewell office:

jonathan.owens@lewis-dick.com
ann.chapman@lewis-dick.com

Crawley office:

sam.woods@lewis-dick.com
ian.drewitt@lewis-dick.com

For clients based in Hampshire
call 01428 727586
James.Winfield@lewis-dick.com
hampshire@lewis-dick.com

 

 

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