Demystifying the Residential Lease Extension Process

Leaseholders seeking to extend their leases under the Leasehold Reform, Housing and Urban Development Act 1993 often find themselves navigating a complex journey fraught with legal intricacies. However, armed with the right knowledge and a competent professional team, the process can be streamlined to achieve a hassle-free outcome. 

Understanding Your Rights

The Leasehold Reform Act 1993 grants leaseholders the right to extend their leases by 90 years, with a peppercorn ground rent. To qualify, leaseholders must have owned their property for at least two years, and the original lease term should have been a minimum of 21 years.

Assembling Your Professional Team

Central to the lease extension process is the engagement of a property solicitor and a valuation surveyor. These professionals play crucial roles in guiding leaseholders through the intricacies of the process. A knowledgeable valuer provides advice on the premium payable and negotiates with the freeholder's valuer, while the solicitor handles statutory notices, lease agreements, and conveyancing matters. It's imperative to choose professionals with expertise in leasehold valuations to ensure a smooth journey.

Valuing the Premium

Determining the premium payable to the freeholder involves a meticulous calculation based on Schedule 6 of the Act. The premium comprises elements such as the reduction in the freeholder's property value due to the lease extension and, if the lease has less than 80 years remaining, a share of the 'marriage value.' However, compensation under certain elements is rare, with the premium typically decreasing as the lease term extends.

Serving Notice

Leaseholders may attempt informal negotiations with the freeholder if the relationship is amicable or if the premium is modest. Alternatively, a formal notice under Section 42 of the Act can be served by the solicitor, proposing a premium, typically leaving room for negotiation. Upon serving notice, the freeholder may request a deposit, and a counter-notice is usually served in response, initiating the negotiation process.

Agreeing Terms

Following the exchange of notices, there's a six-month period for the parties to agree on the terms of the new lease and the premium. Solicitors liaise to settle lease terms and the freeholder's costs, while surveyors negotiate the premium. If agreement cannot be reached, the case may be referred to the Tribunal for determination.

Tribunal Application and Completion

Referral to the Tribunal occurs if terms remain unresolved after six months. However, parties often settle before the hearing. Upon agreement, contracts are exchanged within two months, and solicitors register the new lease with the Land Registry upon completion.

Lease Extension Journey Summary

While the lease extension process may seem daunting, with the right professional support, it can be managed effectively. Engaging a team of experienced Chartered Surveyors and solicitors specializing in lease extensions is crucial for a smooth and hassle-free experience. For expert guidance and assistance, reach out to our dedicated team, equipped to handle lease extension cases with precision and efficiency.