If you own a leasehold property it's value reduces over time. The shorter the lease, the less valuable the property becomes.
Because of this, you are protected by law to the right to extend your lease. The right is to add 90 years to whatever is left on the current lease. So for example if your current lease had 60 years left you could extend the lease and get 150 years. You would also reduce the ground rent to zero.
The freeholder (who owns the land) is entitled to a payment from you for extending the lease and the amount of this is based on a formula which is outlined in law.
How much does a lease extension cost?
The cost of extending a lease will vary significantly based on the property itself and the lease. The total cost is usually more than £10,000 but can be as high as £100,000+.
The total cost of the lease extension is made up: - Your own legal and valuation costs which are typically £1,500 to £2,500 range. - Your landlords 'reasonable' legal and valuation costs which are roughly the same again. - The payment due to the landlord for extending the lease – Stamp duty (which is only payable on lease extensions above £125,000)
Why should I extend my lease?
It is an investment in your home. It will make your home more valuable, easier to sell and reduce your ground rent to £0. The sooner you do it the better as every year you put it off it gets more and more expensive to do it.
Am I eligible to extend my lease?
To be eligible to extend your lease you need to have owned the home for at least 2 years and the original lease length should have been above 21 years. OR if you are buying the home you should ask the vendor to file a formal notice with the freeholder (a Section 42 notice) and then transfer the rights to you on completion.
Will the lease extension law change effect me?
The government is currently reviewing the law around leasehold properties. Currently it is unknown exactly what these changes will be and when they will be made. If you have a property which is close to 80 years it is risky to wait and hope that the changes in legislation are positive and happen in time.
How is the lease extension premium calculated?
How long does a lease extension take?
The full lease extension process takes anywhere from 3 to 12 months, but on average it is around 6 months in total. It is highly dependent on how proactive the freeholder is in responding to requests and if an agreement can be reached when negotiating.
What is marriage value?
Do I have to pay stamp duty?
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