Published: 08/01/2020The Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”) provides leaseholders with the right to extend their lease; subject to certain qualifying criteria being met.
In brief, the Act provides the leaseholder with a right to extend the lease term by a further 90 years and extinguishes the ground rent. This is known as a statutory lease extension. The right is one of compulsion, as historically a Freeholder could demand a premium at its discretion or refuse a lease extension carte blanche.
Below is a step-by step guide on extending your residential lease:
- Check you’re an eligible leaseholder. Your original lease must have been longer than 21 years and you must have owned the property for two years or more.
- Ensure you have the funds to complete the process, which can cost from several thousand pounds.
- Find out who owns the freehold and if no freeholder can be found apply for a vesting order.
- Appoint a valuation surveyor with expert knowledge of both leasehold and the local property market. They should be a member of RICS and ideally ALEP.
- Appoint a solicitor with experience in extending a lease and who is a member of ALEP.
- Consider whether to approach your freeholder personally to discuss extending your lease or get your surveyor or solicitor to do this for you.
- If your freeholder is willing to negotiate and you reach an agreement easily, make an informal offer.
- If your freeholder accepted your informal offer, you may now make a formal offer. (If they did not accept your informal offer, your solicitor will need to serve a Section 42 Notice).
- The freeholder may now require you to pay a deposit within 14 days. This will be 10% of the cost of the lease or £250, whichever is higher.
- The freeholder will serve a counter notice (Section 45), either accepting your offer, proposing alternative terms or rejecting your request.
- If no agreement is reached, you can seek help from the Leasehold Advisory Service.
- You can apply to the First Tier Tribunal or Leasehold Valuation Tribunal. Unfortunately, this could turn out to be a lengthy and expensive process, see http://decisions.lease-advice.org/ for more information on tribunals
- If you have a mortgage on the property, your lender will need to approve the lease extension.
- Your solicitor will finalise the lease extension.