Most lease extensions can be dealt with relatively quickly because there isn’t a great incentive for freeholders to stall or to try and charge an exaggerated premium.
Lease Extension Solicitors
Lease extensions are a common feature in London where there are many thousands of flats in converted houses.
The most common reason for extending your long lease is in preparation for selling. The policies of many mortgage lenders have changed and many mortgage lenders will only lend where the remaining lease is at least 85-90 years.
The above often comes as both a shock and disappointment to flat owners.
The good news is that long leaseholders have a statutory right to extend and the premium to extend the lease, typically back up to 125 years, cannot be extortionate.
However, assuming that you can just informally negotiate a quick extension with the freeholder to avoid the legal and surveyors cost of starting the statutory process whilst negotiating at the same time is not advisable. This does open up the possibility of the freeholder trying to exploit the situation, especially if you need to proceed quickly if you are looking to sell the flat,
Share of freehold lease extension
In many cases, flats in converted houses involve the leasehold owners also having a share of the freehold. This often means that all the leaseholders can agree to extend without having to pay a premium.
2 year ownership requirement
The right to extend a residential long lease only applies if the owner has been registered owner at the Land Registry for 2 years. This is one of the reasons a potential buyer, and their mortgage lenders, will require that the extension is formally agreed with the freeholder before proceeding. It is common for the agreement to extend outside the statutory price (i.e by consent) to be agreed and then assigned by the seller to the buyer.
The premium to extend – what’s marriage value?
The key reason why most leases are extended when there is still more than 80 years remaining is marriage value. This is a technical calculation formula which applies under the statutory process whereby the premium increases quite a bit if the lease has less than 80 years outstanding. The term marriage value has nothing to do with marriage. In general terms, the shorter the remaining term the more expensive it is to extend
Why use a solicitor to extend your lease?
The key reasons for instructing experienced cost effective solicitors are :-
- To start the parallel process of preparing and serving the documents to start the statutory lease extension process whilst at the same time, starting the without prejudice (non-binding without formal agreement) negotiations to extend by consent.
- To handle the additional aspects of the lease extension such as obtaining formal consent from the existing mortgage lender.
- To deal with the necessary legal paperwork to formalise the extension after it has been agreed.
- To speed up the process and generally protect your interests.
- Complications can arise such as where the freeholder can’t be located or is unco-operative.
How long to extend a lease?
This depends a lot on how well your lawyer deals with the negotiations and process but also of course depends on how other involved parties behave such as the freeholder, their solicitor and the valuers. The process can vary between 6 weeks for a very quick agreement by consent to over 6 months if there are delays.
For experienced and affordable lease extension legal help please do contact us – we have successfully advised on a large number of lease extensions.
With 3 offices in London and a large number of property lawyers, we know that residential long lease extensions are very common. We know this because we deal with a lot of those extensions. We’re tried and trusted both in terms of advice and service levels.