And if there is one thing every Residential Property Solicitor knows for sure, it is the longer you have to run on your lease, the better off you are. Owning a leasehold property is like having a long tenancy and the longer that tenancy is, the better off you are in terms of being able to sell your leasehold house or flat now or in the future.

When should I extend my lease?

You should start thinking about extending your lease once it runs down to between 83-82 years. This is because if you renew your lease when it has less than 80 years to run, you will be required to pay the marriage value. The marriage value is the difference in a leasehold property’s value before the 80-year lease is extended and after.  The difference between these two amounts will be paid to the landlord so they receive the extra market value of the extended lease.

Top tip –

Never buy a leasehold property where the lease has less than 70 years to run without consulting a Residential Property Conveyancer. Your estate agent may honestly believe that extending the lease on the property is a simple matter; however, your Conveyancer can conduct extensive due diligence on the property and the landlord and provide you with a realistic idea of how much it will cost you in money, time, and stress to extend the lease. It can also be extremely difficult to secure a mortgage on a property with a lease of 70 years or less.

What are the eligibility criteria for extending a lease?

To extend your lease, you must have:

• a long lease of 21 years or more.
• owned the property for two or more years.
• not brought the property through a Shared Ownership Scheme (unless you have achieved 100% ownership).

Currently, owners of leasehold flats can extend their lease for 90 years, house owners by 50 years.

What is the process of extending my lease?

The following is a brief guide to the lease extension process:

Step 1 – Inform your landlord that you plan to extend your lease and will be following the statutory process.

Step 2 – Instruct a Lease Extension Solicitor to advise and represent you.

Step 3 – Have your flat or house valued by a valuer experienced in leasehold extensions and the local property market.

Step 4 – Make an offer to your landlord concerning the premium you are prepared to pay in the form of a Tenant’s Notice (which your                     Solicitor will draft). The premium is the sum you will pay to the landlord in exchange for a longer lease.

Step 5 – Pay a deposit if the landlord requires one.

Step 6 – Enter into negotiations on the premium. If you and your landlord cannot agree on the amount you will have to apply to the                      First-Tier Tribunal (Property Chamber) who will establish what the premium should be. It is rare for a case to go to the Tribunal                as experienced Leasehold Extension Solicitors are skilled at negotiating fair premiums.

When are the leasehold reforms being introduced?

Under proposed legislation announced in January 2021, most leaseholders will be able to extend their lease for 990 years with zero ground rent.

At the time of the announcement, Housing Secretary Rt Hon Robert Jenrick MP commented:

Across the country people are struggling to realise the dream of owning their own home but find the reality of being a leaseholder far too bureaucratic, burdensome and expensive.

We want to reinforce the security that home ownership brings by changing forever the way we own homes and end some of the worst practices faced by homeowners.

These reforms provide fairness for 4.5 million leaseholders and chart a course to a new system altogether.

Top tip –

There has been no indication of when the new leasehold reforms will be implemented; so far, only a draft Bill has been published. If your lease has less than 83 years to run it is important to speak to a Solicitor about renewing it as soon as possible.

Wrapping up

Extending your lease is essential once its length runs down to 83-82 years (notice how we keep repeating this fact. We want to sear this message into your brain, so you avoid paying the marriage value). As long as you instruct an experienced Solicitor and valuer, the process of extending your lease should run smoothly.

Our team advise and represent landlords and leaseholders in all aspects of leasehold extensions, leasehold enfranchisement, and right to manage. For a free consultation please call us on 0208 300 6666.