Renewing or extending the lease on a property not only secures ownership into the future – but also helps maintain the value of the property.
The most appropriate time for renewing or extending a lease is usually when there are 80 years left to run on the lease – when a lease drops below 80 years, it usually costs more to renew or extend it because a landlord (freeholder) is entitled to charge more to extend shorter leases, known as “marriage value”.
When renewing r extending a lease, other factors to be taken into consideration include:
- To be able to renew or extend a lease on a property, the current owner must have owned the property for at least two years
- The remaining lease must be 21 years or more
- The property must be residential
- You do not have to be living in the property to extend or renew a lease
- If the leaseholder is a company – as in the case of a property held as an investment in a portfolio – then it is still possible to extend the lease
- It may be harder to obtain a mortgage on a property with a very low lease to run – usually around 60 years – even though buying such a property and holding on to it for two years before extending the lease can be an investment option for some buyers.
The process of renewing/extending a Lease
- A solicitor will send an Initial Notice to the landlord, offering a suggested “premium” for the lease extension
- Lease extensions also involve a property valuation by a surveyor – and the premium for extending or renewing the lease will also depend on this valuation
- The landlord may accept the premium – or send a counter notice with an increased premium
- Leaseholders are entitled to extend their lease by 90 years under the Leasehold Registration Act – and ground rent will not be applicable
- It is important that the new lease is checked thoroughly by your own solicitor before it is agreed
- Leaseholders seeking to extend a lease are responsible for the landlord’s costs as well as their own legal costs and surveyor’s fees.
Freeholders can be required by law to extend a lease – but although most lease extensions or renewals go smoothly, occasionally there may be problems with a freeholder.
LAWTEC Solicitors can negotiate in cases where a freeholder may prove difficult to deal with – and will keep clients informed at every stage of the process.
The process of extending a lease usually takes several months, or even longer in more complex cases.
LAWTEC Solicitors can also advise on lease renewals and extensions which have already been agreed between the landlord and leaseholder, but which still require the statutory documentation to be completed.
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At LAWTEC Solicitors, we have specialist experience in all areas of Motoring Law/Immigration Law and Commercial leases and can provide our assistance in these matters with a free initial assessment to help you along the way.
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