Our fees and disbursements for Leasehold Extension
We have the following fees for a Leasehold Extension so long as the payment for the extension is no more than £10,000
Our costs including VAT – £480
Land Registry Fee – £40
Official Copies – £18
Bankruptcy Search per person buying the property – £2.40
Land Registry Search – £3.60
Identification Search per person – £4.50
If an interbank transfer required to transfer monies to the landlord then a charge of £37.00 apply
All the above figures include VAT where applicable.
If the payment is over £10,000 please contact GEvans@campions.co.uk
We have extensive experience in dealing with Leasehold Extensions. For any questions in relation to this please contact firstname.lastname@example.org
What is a Leasehold Extension?
If you own a residential leasehold property then at some point you may need to consider extending the term of the lease .
The question is when should you consider extending the lease.
There are some important dates which need to born in mind. One date is the 80 year date from the end of the term. After 80 years generally it becomes more expensive to extend the lease. The second important date is how long the lease lenders may require. Generally lenders will require a lease which is the length of the mortgage and 35 years.
Taking those factors into account many owners will be considering an extension once the lease goes below the term of 100 years.
Lenders may insist of a minimum of 85 year term in respect to shared ownership leases.
There are two ways in which a lease can be extended. The most common method is mutual agreement between a landlord and tenant. However if terms cannot be agreed then the tenant has a statuary right to apply to the tribunal or issue court proceedings to determine the terms.
If you have a shared ownership lease then statutory rights do not apply but the housing association will grant a tenant the same rights as if they have a statutory right.
Why extend a lease?
A leasehold is known as a ‘wasting asset’ because its value decreases with time. For instance, a lease with over 100 years remaining will be more attractive to buyers than a lease which is coming to an end.
In addition, a lease with less than 80 years remaining has additional costs due to the “marriage value”.
The marriage value is the difference between what the freehold could be sold for if there were no lease, and what it can actually be sold for while encumbered by the lease. When the remaining term of a lease is less than 80 years the tenant becomes liable to pay half of the marriage value in addition to the existing rent.
As a result, a lease with a term of around 80 years or less is far harder to sell than a lease with a longer remaining term. The value of the leasehold may be significantly reduced and the shorter the lease the lower the value.
Extending the term of a lease can therefore protect and even enhance the value of your asset.
How do you extend a lease?
There are two ways to extend a lease, by voluntary agreement between the landlord and the tenant or by taking the matter to the tribunal in the event of a dispute as the terms.
It is always better if you can extend by agreement.
Voluntary extension of the lease can be done at any time and on any lease by mutual agreement between the landlord and the tenant. Extending the lease in this manner can save time and legal costs if the landlord is willing to come to an agreement without a dispute. For this reason voluntary extension should always be considered before pursuing statutory extension.
The landlord is legally bound to comply with a request to a statutory extension provided that the tenant is a qualifying tenant with a qualifying lease. If the tenant and the property satisfy the qualifying conditions then they have a right to extend the lease for a further 150 years if the property is a house or 90 years for a flat. The County Court can arbitrate on disputes over the tenant’s right to an extension and a Tribunal can arbitrate over disputes regarding the price of that extension.
What is a qualifying lease?
In order to qualify for statutory extension you must have owed the lease for at least 2 years and the lease must have originally been granted for a term of more than 21 years – or else contain a clause providing for perpetual renewal.
If you are buying a property and wish to extend the lease, you can request that the seller serves notice upon the landlord before selling. This will allow you to extend the lease without having to own the leasehold for 2 years beforehand.
If you are extending the lease on a flat then the lease will not qualify if the landlord is a charitable housing trust or if the lease was granted for business purposes, such as offices.
What is the Lease Extension Process?
To begin this process you should first consult a solicitor who will check that you are eligible for a lease extension and obtain a valuation of the property. Your solicitor will then serve notice upon the landlord. This notice will make clear your intention to extend the lease and propose a price to be paid as the premium – as established by the valuation.
After the notice has been served the landlord has 2 months to respond with a counter notice. Once the landlord has given their counter notice there is a 2 month period for negotiating the price. After this period the extension should be granted unless no agreement is reached, in which case a price will be determined by a Tribunal.
How much will a Lease Extension Cost?
For the extended term of the lease (i.e. the time after the original lease was due to expire) no rent shall be due – this is referred to as peppercorn rent.
There will however, be a premium payable for granting of the extension. This premium will either be agreed between the parties during the negotiation period or determined by a Tribunal.
Upon serving notice of your intention to extend the lease you may be required to pay a deposit of either £250 or 10% of the premium (usually whichever is greater).
Terms of an Extended Lease
If the lease is extended by voluntary agreement then any new terms which the parties wish to include can be incorporated.
If the lease is extended by statutory extension then the terms of the lease can be modified only to take account of alterations to the property. Any perpetual renewal clause will be excluded and a clause prohibiting the tenant from granting a sub-lease will be included.
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