If you’ve decided you’d like to extend your lease but aren’t quite sure how to go about it, then you’re not alone. Lease extensions can be rather complex, often involving solicitors and surveyors. In essence, it’s a formality for a rather simple request – to be allowed to remain as a tenant in your property for a longer period of time. As a rule, 90 years can be added to the existing lease agreement. In this guide, we’ll run through the steps you’ll need to take in order to successfully extend your lease.
Before you begin…
You’ll want to check that you are eligible for a lease extension. In order to qualify for a lease extension, you’ll need to have owned a long lease (one that’s at least 21 years) for over two years.
You’ll also need to consider the upcoming costs involved. The extension itself is going to demand a premium, the amount of which depends on a number of factors, including the value of the property, the ground rent, number of years left on the lease, and more. It’s important to note that this premium is negotiable, and we’ll discuss it more in due course. You’ll also need to factor in solicitors’ fees, surveyors’ fees, the freeholder’s legal and valuation fees, and Land Registry fees.
Why do you need a solicitor and a surveyor?
While it is technically possible to secure a lease extension without professional help, it’s not recommended since the downsides of a poorly-arranged lease extension will likely be far more costly than a solicitor and surveyor.
A surveyor will provide you with a valuation of the property and a guide as to how much you should offer to pay for your lease extension. They’ll often give you an upper and a lower limit which will be useful when it comes to negotiating the premium. This isn’t a legal requirement but it’s incredibly useful and will help to prevent you from being taken advantage of by your freeholder.
A solicitor will help you prepare your application and see you through the formal proceedings. They’ll act as a liaison between you and your freeholder and oversee any paperwork drawn up by the freeholder. While uncommon, it’s been known for freeholders to add small print to their contacts without the leaseholders’ knowledge and demanding higher rent fees. A solicitor will have the experience and vigilance to spot these tricks and ensure you are protected. Seeking professional legal help will also allow you to settle any disputes in a tribunal, should things escalate to such a level.
Extending your lease: The steps
- The first thing to do is to inform your freeholder that you will be seeking a lease extension. This is mainly just a courtesy to let them know that they’ll be hearing from solicitors in the near future. Being taken by surprise may set the wrong tone and make your freeholder less agreeable.
- Next, you’ll need to hire a solicitor, specifically one who’s an expert in lease extensions and a member of the Association of Leasehold Enfranchisement Practitioners (ALEP). Their expertise will help to make the whole process far smoother and easier for you.
- The next step is to hire a surveyor who will provide you with a property valuation. Again, it’s best practice to hire someone who has experience with lease extensions. Your solicitor will likely be able to put you in touch with an appropriate surveyor.
- Once the property has been valued, you’re ready to make a formal offer to the landlord in the form of a tenants’ notice. A tenants’ notice will include information regarding the property, the valuation, your proposed offer, and a deadline by which the landlord must respond. Your solicitor will be able to prepare this for you and ensure nothing is missing.
- Depending on the landlord’s response, you may need to negotiate with them regarding your offer. Your solicitor will also take the lead here to ensure you receive the best rate possible and aren’t taken advantage of by the landlord.
The entire process of organising a lease extension can take several months, perhaps even a year, so it’s important to remain patient and trust your solicitor.
Ways to reduce costs
A lease extension can be a costly process, so reducing unnecessary costs is paramount. One tip is to extend your lease as early as possible. After a lease reaches 80 years it becomes more expensive to purchase an extension.
It may seem counterintuitive, but to keep costs down in the long run you’ll likely need to hire the most qualified solicitor and surveyor you can find. Not only will they help to make the proceedings happen faster, they’ll also get you the best deal possible so that you aren’t paying over the odds for the rest of your leasehold. It may sting your wallet in the short term, but in most cases it’s worth paying for the best now to avoid paying more down the line.
Here at James Anderson, we pride ourselves on providing the most helpful guidance and advice. Our blog is full of useful guides and insights into the property sector. If you’d like to learn more about lease extensions then get in touch with our team today.