Leasehold extension solicitors

28 Sep What should you do if you need to extend your lease?

Posted at 00:00h in Leasehold Enfranchisement, Residential Conveyancing by

Craig Rennie, conveyancing solicitor from the Residential Property Department at HRJ Foreman Laws Solicitors discusses residential lease extensions, the importance of acting before it reaches below 80 years, the benefits of collective enfranchisement and the process to extend your lease.

Why does your lease length matter?

The magic number you need to remember is 80 years. Once your lease drops below this threshold, the cost of extending it increases significantly. This is due to what’s known as “marriage value,” an extra amount you have to pay the freeholder. Acting before this point is crucial to keeping costs down. A lease at 79 years might cost more than three times the cost of extending at 81 years. This is driven by the way lenders, valuers, and buyers now perceive short lease properties.

A short lease can also make it very difficult to get a mortgage, as many lenders will not lend on properties with a short remaining term. Many now refuse to lend on properties with leases below 85-90 years

The collective solution

Collective enfranchisement is an alternative to individual lease extensions. This approach often delivers substantially better value and provides complete long-term control over the building.

For buildings with multiple short leases, collective action can provide each leaseholder with a significant cost saving compared to individual extensions. It is important to seek early professional guidance to coordinate the process effectively.

While collective enfranchisement can take longer than individual extensions, this timeline can work to leaseholders’ advantage. The extended process allows for better financial planning and often coincides with property improvements that add value beyond the freehold acquisition. For those facing immediate mortgage pressures, we can often negotiate interim solutions with lenders who recognise that collective enfranchisement significantly enhances long-term property security.

Your two options- formal or informal

When extending your lease, you have two main routes to choose from, and our specialist solicitors can help you determine the most strategic approach for your situation.

The formal statutory route is a legal process that gives you a statutory right to extend your lease by an additional 90 years and reduce your ground rent to zero (known as a “peppercorn” rent). This route gives you a legally protected right to an extension, removing the risk of the freeholder refusing your request. To start, you must meet certain criteria and serve a formal notice on your freeholder.

Alternatively, the informal negotiated route involves directly negotiating with your freeholder. This can be a quicker and cheaper option if you can reach an agreement with your freeholder. However, there is risk as you do not have the same legal protections. The freeholder can set the price and the new lease terms, and they have the right to refuse to grant you an extension.

Click to read – What is the difference between the Statutory and Non-Statutory route?

The step-by-step process to obtaining a lease extension

Regardless of which route you choose, the process begins by seeking specialist advice.

Seek expert advice – This is the most important step. You should contact us alongside a professional valuer from the very beginning. We will tell you if you are eligible and advise you on the best route forward.

Get a valuation – A professional valuer will calculate the estimated cost of your lease extension. This is a crucial step for both formal and informal negotiations.

Serve notice or negotiate – We will serve the formal legal notice on your freeholder or begin negotiations on your behalf, managing all communication to ensure your interests are protected.

Completion – Once a price is agreed upon, we will handle all the legal paperwork to finalise the extension and register the new lease with the Land Registry.

Don’t delay – Waiting to extend your lease can be a costly mistake. The price of an extension increases over time, especially as you get closer to the 80-year mark. Taking action now is the most effective way to secure your property’s value and ensure a smooth, stress-free future.

For more information and legal advice on any leasehold or conveyancing matters

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