"As the term of your lease decreases, it becomes harder to sell your leasehold title."
How do I extend my lease?
As the term of your lease decreases, it becomes harder to sell your leasehold title. The longer the remaining term of the lease, the easier it is to obtain a mortgage. In fact, lenders are less likely to lend against leases where the unexpired term is less than 80 years.
Extending your lease widens the market of buyers and makes your property more marketable.
Acquiring an extended lease is an individual right and you must have held your lease for two years or more.
The Leasehold Reform, Housing and Urban Development Act 1993 (“1993 Act”) allows all long leaseholders (leases for more than 21 years) the right to extend their lease. There are certain steps you need to take.
- Instruct specialist surveyor to advise on premium payable and negotiations with the freehold’s representatives (if applicable)
- Prepare and serve section 42 Notice of Claim on your freeholder.
- The notice will include a specific date for the landlord to serve a counter notice. This must be at least 2 months from the date which the Notice of Claim is served
- Your freeholder and their surveyor have the right to access the flat for the purpose of obtaining a valuation.
- You will pay a 10% deposit on your proposed premium or a minimum of £250.
What happens next?
- If the freeholder fails to serve a Counter Notice in reply, no later than 6 months after the Counter Notice was due to be served you must apply to the county court to determine the terms of the acquisition of the new lease as expressed in your Notice of Claim.
- If the freeholder serves a Counter Notice and disputes your claim, they must state the reasons why they do not believe you had a right to acquire a new lease and must apply to the county court within 2 months of the Counter Notice for a declaration that you are not entitled to the lease extension.
- If the freeholder rejects your Notice of Claim on redevelopment grounds, they must apply to the county court for an order that the right to a new lease shall not be exercised.
- If the freeholder serves a Counter Notice admitting your right to a new lease but disputes the terms proposed, the freeholder’s surveyor and your surveyor will attempt to negotiate and agree the terms in dispute. A claim can be initiated at any time providing that you satisfy the statutory criteria set out in the legislation.
- If the negotiations are unsuccessful you can apply to the First Tier Tribunal (FTT) within 6 months. The FTT will determine the terms in dispute and the terms of the acquisition.
- If negotiations are successful, the premium and terms of the new lease can be agreed and a new lease granted.
You can approach your freeholder to see whether they will be prepared to enter a voluntary lease extension. If so, you will not need to satisfy the criteria set out here and above.
- Melissa Casey
- Landlord and tenant
- Lease Extensions
- Leasehold Enfranchisement
- Residential Leasehold Management
- Commercial Property