A Breakdown Of Lease Extension

If you own a leasehold interest, then you might be entitled to get a statutory extension on your lease

. This means that you can extend the term for up to 99 years with no ground rent payable.

If you have never thought of leasehold extension before, read on to find out the basics.

Who is eligible?

There are only a few criteria you need to meet in order to be eligible to apply for a leasehold extension under the 1993 Leasehold Reform Act. Firstly - and obviously - you need to live in a property where you own the lease and someone else owns the freehold. Most commonly, this will be in a flat. You also need to have owned the property for at least two years, although it isn't necessary that you live there. Your original lease should also have been for at least 21 years in order to be eligible to apply.

Why do it?

People apply for a lease extension mainly because it makes their property easier to sell. As your unexpired lease decreases, so does the value of the property, so it makes financial sense to extend it if possible. Also, it is often hard to get a mortgage on a property where the lease is less than 60 years (as if it is less than this, many lenders consider it to be unmortgageable), so if you think you might want to sell your property, investigating leasehold extension is definitely worthwhile.

What costs are associated with it?

As with anything, there are costs associated with lease extension. You will have to pay your own professional fees as well as your landlord's, to whom you must service the notice of your intent. You will need to pay for a valuation of your property and depending on the price agreed for the lease extension, you might have to pay stamp duty. There are also land registry fees to consider and, if your lease is for less than 80 years when you apply, you will also have to pay something known as marriage value.

What if my landlord refuses?

It is unlikely that your landlord will refuse your lease extension, but there might be some discrepancy over the price. If there is then you will need to go to a leasehold valuation tribunal, where you will put forward your case. If the landlord wants to challenge your right to make a claim in the first place, then it will be their responsibility to refer the case to the tribunal.

by: Tim Bishop

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