If you need to extend the lease on a property you own, talk to ONP Solicitors!

What is a lease extension?

When purchasing a property, it will either be leasehold or freehold. A lease extension refers to the process of extending the term of a lease on a property, usually for leasehold properties like flats or apartments.

Freehold – Owning the freehold means you own both the property and the land it stands on. As the freeholder, you have full control over the property, including the responsibility for maintenance and any repairs needed.

Leasehold – With a leasehold, you own the property but not the land it’s built on. The land and any common areas (like hallways or gardens in a block of flats) are owned by the freeholder, and you lease the property for a fixed period (the lease term). Once that lease expires, the property generally reverts to the freeholder unless a lease extension is negotiated. Leaseholders typically have to pay ground rent and service charges to the freeholder for the upkeep of communal areas.

Why do I need to extend my lease?

If a lease runs down to zero, the leaseholder no longer has the legal right to occupy the property, and ownership reverts to the freeholder. Essentially, the leaseholder loses their stake in the property and any investment made in it.

As a rule, when the lease falls below 90 years, the value of the property can start to decrease, and it may become harder to sell or remortgage.

If your property has a short lease when you come to sell, buyers may be reluctant to buy as they would need to take on the lease extension too. Similarly, if you are due to remortgage, some lenders may refuse if you have less than 85 years remaining on your lease.

Lease extensions can help maintain the property’s value and ensure long-term security for the leaseholder.

How do I extend my lease?

Time is an important factor when it comes to lease extensions and because the freeholder is unlikely to approach you, it’s best to be proactive. Lease extensions can happen in two different ways: statutory and voluntary.

Statutory Lease Extensions

If you’ve owned your property outright for over two years, you qualify for a statutory lease extension, which allows you to add 90 years to your existing lease term.

Advantages:

• Extended Lease: You’ll receive an additional 90 years on top of your current lease.
• No Ground Rent: You won’t have to pay ground rent to the landlord, though service charges will still apply.

Considerations:

• Lengthy Process: The statutory process can be time-consuming, with strict timelines. Missing these deadlines could delay your ability to claim another extension for a year.
• Higher Costs: Statutory lease extensions often come with a higher price tag compared to voluntary extensions.
• Valuation Needed: A property valuation is required to determine the premium for the lease extension. We can refer you to experienced surveyors if needed.
• Additional Fees: You will also need to cover the landlord’s legal fees and the surveyor’s fees.

Voluntary Lease Extensions

With a voluntary lease extension, the landlord sets all the terms, including the cost and length of the extension.

Advantages:

• Flexible Process: You can approach the landlord for an extension without adhering to the strict statutory requirements.
• Potentially Lower Costs: Generally, a voluntary lease extension may be cheaper than a statutory one, though this isn’t guaranteed.

Considerations:

• Ground Rent: The Landlord is under no legal obligation to reduce the current Ground Rent to zero on completion. They can maintain the current Ground Rent until the expiration of the original lease term, only then will it be reduced to nothing.
• Additional Costs: You may be responsible for the landlord’s legal fees and surveyor’s costs, in addition to your own.

As of June 30, 2022, ground rents for new leases have been eliminated for qualifying long residential leasehold properties in England and Wales. For more information, click here.

What is the Leasehold Reform?

The Leasehold Reform refers to a set of legal changes aimed at improving the rights of leaseholders in the UK, particularly in England and Wales. The reforms are part of a broader effort to address issues related to the leasehold system, which has been criticised for being unfair to homeowners.

The Leasehold and Freehold Reform Bill has received Royal Assent and has now become law, but it’s not quite as simple as that.

Click here to learn about the original purpose of the bill, what has become law, the latest updates, current issues, and the impact on leaseholders. We’ll also share our views and details about the services we offer to help.

Why Choose Us?

At ONP Solicitors, we’re committed to securing the best terms for you. Our expert team will manage the entire process from start to finish, ensuring your new extended lease is completed and registered with HM Land Registry.

We aim to make things hassle-free, only reaching out to you for urgent instructions to keep everything running smoothly. Additionally, we collaborate with a skilled team of surveyors who can assist as needed.