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Selling a flat with a short lease

Selling a flat with a short lease

Selling a property with a short lease can become very problematic as depending upon the length of the lease many lenders will not lend on the property. This leaves you with a very small pool of purchasers. The lower the lease, the more restrictive this becomes. It is likely that you will have to sell your property for less than its true value because any potential purchaser will have to navigate through the lease extension process, with all the additional costs and time that encompasses.

Our lease extension experts can guide you through with efficiency.

What does short lease mean?

In general, a short lease is not as short as you may think. In lease extension terms any lease that drops below 80 years is classed as a short lease. It is stated that the shorter the lease of a property, the lesser the value.

Can you sell a flat with a short lease?

There is nothing to stop a property with a short lease selling on the open market but, as mentioned above, it is likely to restrict the type and amount of potential purchasers. For this reason, a lot of short-lease properties are sold at auction. When the duration of the leasehold declines below 80 years, the lease extension cost increases significantly. Hence, a lease with a short length can be difficult to sell and you will not get the best price you could if the lease was longer.

Usually, mortgage lenders will not accommodate flats with short leases..

How to check the lease of a property?

To know if your lease is shorter or not, you need to check your property lease. If you do not have a copy of your lease, then your solicitor can download a copy from the land registry website instantly for about £7. If you need any help regarding how to check the lease duration, you can contact our chartered surveyors who can assist you. Once you get to know the detailed information about your lease duration, it will be clear to figure out if your property lease has a short lease issue or not.

How to deal with Short Lease Issues

You can extend the short lease of your property: Leaseholders who have owned their property for 2 years have a statutory right to extend the lease by 90 years. Therefore, your new lease term will be equal to the remaining term on your lease plus 90 years. If you want to extend your short lease, our chartered surveyors will assist you.

If you are purchasing a property with a short lease you can ask the current vendor to serve the statutory notice to extend the lease and transfer the right to continue the lease extension process to you upon completion of the sale. This was you do not have to wait 2 years after purchasing the property to extend your lease.

Buying your freehold: Once you buy the freehold of your leasehold house, your property will convert to freehold. Then you can sell your freehold property, which will command a higher price and the buyers can get a mortgage on it. 

Sell your apartment or resident to a cash buyer: If you have a short lease on your property you can sell your property to a cash buyer as they will not need a mortgage.

By selling to a cash buyer, there will be several benefits, you will save the expense of purchasing or extending the lease, and you will not need any solicitor or surveyor to negotiate or guide you with the freeholder. 

So why not schedule an appointment with our experts and have a valuation of your property quickly. They will guide your short-lease term issue and will provide you with the best solution.

Problems with a short-term lease

Usually, short-term lease issues occur when the owner cannot manage to extend their lease

The biggest issue with the short lease is that shorter leases are hard to sell. The shorter the property lease, the lesser the value.

Are you facing problems during your lease extension process or buying or selling a freehold of a house? Call 01753542984 for a 10-minute free consultation and talk with our lease extension specialists to solve your issue.

Making Alterations to a Leasehold Property

Making alterations to a residential leasehold property is not always a simple task. Many leases allow the landlord to charge alteration fees from the leaseholders. A Leasehold Valuation Expert will know about what steps should be taken in such cases.  

The common questions which are asked by the leaseholders about home repair and improvement are,

  • Can you make alterations to a leasehold property?
  • What fees can a landlord charge to the leaseholder? and does the landlord grant permission to do so?
  • Can you build an extension on a leasehold property?

Are you facing the same issues as a leaseholder or dealing with any other leasehold problems? Our Leasehold Valuation team can help you out with such leasehold issues.

Leasehold Property Alterations

Are you looking to make structural changes to your leasehold property? Then what should you check before proceeding further:

  1. Check your Lease Agreement: Some landlords may grant you permission in the lease only for making minor changes and alterations and some may not grant permission at all without seeking their permission first.
  2. Discuss with the Freeholder/Managing Agent: They will analyze if the proposed arrangement of a leasehold flat will cause any impact on the layout of the flat or will affect neighboring flats.

Even if landlords permit you to make alterations, they may restrict you by imposing certain conditions that may increase the cost of the works. Some may ask you to revert the alterations to the original at the end of the lease or at the time when you leave the flat in the future.

You should obtain legal advice from an expert or experienced chartered surveyor. You must seek permission for the alterations and improvements on the leasehold property in regards to building regulations, structural alterations, electricity, pipes leakage repair or gas line work, drilling walls, constructing a new kitchen or bathroom.

You should also put a Party Wall Award in place between yourselves and your neighbors (even if in an adjacent building)

The permission for proposed alterations will depend on how large the renovation or the alteration work is. For massive remodelings, the landlord may provide a license for alterations keeping in mind the effect of the alteration on the residential property. Even after leaving the property, it is crucial to know that the lease is planned to preserve the benefit of all the individuals and not harm the flat structure.

Costs of Alterations:

With regards the alteration cost, you may also have to pay a fee for the license to alter to the landlord. The Landlord and Tenant Act 1927, Section 19 states that the alterations license or consent permission is not to be irrationally denied, the right of the landlord to claim for the charges of a moderate amount is a legal right of the landlord. This may include administration charges, legal fees, hiring of technicians/engineers, granting a license, and reinstatement clause. 

The landlord may charge you more than the reasonable cost to make a profit. In October 2017 the Department for Communities and Local Government affirmed that the leaseholders may suffer unfair costs while making alterations to their leasehold property. The Conveyancing Association has concluded that 75 percent of leaseholders are paying unreasonable “regulatory” payments to their landlord or managing agent as standard and that schemes to correct this unreasonable behavior are inadequate.

In April 2018 the Ministry of Housing, Communities, and Local Government stated that the government and authorities will look into this unreasonable behavior and will investigate the fees that are sometimes more than the service charges, which can affect both the leaseholders and freeholders and examined under what conditions they are justified. 

A leaseholder has the right to question the unreasonable charges, if required, at the First Tier Tribunal or Leasehold Valuation Tribunal. But before applying to the tribunal the leaseholder should speak to a qualified professional in order to understand the application process as well as the law surrounding it. This is a complicated and time-consuming process. Therefore, it is suggested to first have a conversation with a landlord to see if this matter can be resolved.

If you have any questions or queries regarding the law and regulation of leasehold property alterations then you can contact one of our chartered surveyors without any hesitation.

Can a premium be imposed as a condition of granting permission?

This really depends upon what works are being undertaken and also what the lease states about alterations.

The demised premises are the premises included in the lease agreement. The demise premises do not cover the structural or exterior walls. It includes interior walls, interior roofs, or ceilings. Such elements are described precisely in the lease agreement in detail.

If the alteration to the demised premises has been accepted then a reasonable premium can be charged by the landlord. If the permission is refused then the leaseholders can ask for advice and help from the court or the Leasehold Valuation Tribunal. 

Alteration to the landowner`s retained property

The part which is not included in the demised property is the retained property and is a freehold or landlord property. Any alterations to the retained property are highly unlikely to be granted permission by the landlord.

If you are looking to undertake renovations or alterations, Leasehold Valuation Experts can help you in progressing through this process seamlessly. Call 01753542984 for a 10-minute free consultation for lease queries.

Statutory v/s Informal Lease Extension – Benefits and Risks

Investing in a residential property is always considered to be safe. If you own a leasehold property, the value of your property can depend on the remaining number of years left on the lease. You should try to extend your lease before it drops below 80 years. If you own a leasehold property, then after two years you’re eligible to extend your lease. There are 2 ways in which you can do this.  Firstly, with the formal(Statutory) route and secondly but approaching your freeholder directly and asking how much he will want in order to let you extend your lease. This second route is known as an informal lease extension.

Informal Lease Extension

The informal lease extension will not provide any protection whatsoever to you with regards how the freeholder acts. The informal lease extension begins by communicating with the freeholder to see if he is willing to agree to you extending your lease. If so, you can then proceed to the negotiation stage and discuss the lease extension’s new terms, which will include the length of the lease, lease extension cost, and payable ground rent.

There are several benefits that you can get from informal lease extensions:

  1. Minimize the legal cost compared with the statutory cost. (no notice procedures)
  2. Quicker lease extension as no formal process is required to be followed.
  3. No criteria are needed.

The aim of this route would be to reach a mutual agreement. Both sides can negotiate and agree to change the lease terms. You can get a rough lease extension cost calculated by the lease extension valuation calculator online conveniently. With these online calculators, you can obtain an estimated lease extension cost that can be used during your lease extension negotiation process. The leaseholders who don’t have much time and money follow this procedure rather than choosing a statutory process and infusing themselves in professional negotiations for both parties. In this process, any party has the right to change the terms of lease extensions.

As there are no rules, no regulations in this method hence,

  • The freeholders can drag their heels to complete the process.
  • The landlord can ask for any amount of premium and the leaseholder would not be able to apply to the tribunal to determine a reasonable amount as no notices had been served.
  • The landlord can request extortionate professional fees and again the leaseholder would not be able to apply to the tribunal
  • The landlord can simply choose to walk away at any time thereby wasting valuable time.
  • The freeholder has more advantages under this route and that is why the freeholder will usually try to convince a leaseholder to go down the informal route..

Statutory lease extension

The Leasehold Reform Housing and Urban Development Act 1993 controls the statutory lease extension process. Using this process, leasehold owners have the right to extend the lease of their flats. The leasehold owners are therefore urged to follow the statutory lease extension process. To extend the lease on your flat, you need to own the property for a minimum of 2 years.

The formal lease extension has the below list of advantages:

  • You can get a 90-year lease extension on top of your current lease term.
  • The payable ground rent will revert to zero.
  • The lease valuation date is frozen which means in the formal path, the premium value will no longer increase as the term decreases.
  • If you are on the formal path, you would be permitted protection when any dispute occurs. You have the right to take your case to the leasehold valuation tribunals(LVTs).

If you have owned the flat or house for a minimum of 2 years, then we recommend you to go with the formal(statutory) lease extension route. Get guidance from a professional leasehold valuation expert and carry out a lease valuation report. If you have not owned your property for 2 years then you have no choice but to go down the informal route. To get the best advice and guidance on lease extension valuation and lease terminology, you can schedule a 10-minute free consultation with our expert chartered surveyors at Leasehold Valuations.

Contactless Lease Extension During Covid-19 Situation

Lease extensions are a daunting task even in the best of circumstances with various strict deadlines in terms of notices and counter-notices, agreement to the premium and specific terms and completion of the documentation procedures. Lease extensions made outside the statutory route may proceed a little more quickly than when carried out under the Leasehold Reform, Housing and Urban Development Act 1993, but it is a complicated process nevertheless. Considering all that, a global pandemic further increases the uncertainty to an already challenging task.

Valuations during Covid-19

Irrespective of whether you’re following the statutory route or the voluntary route for your lease extension, it is a good thing to obtain a valuation report from a lease extension specialist surveyor. This valuation report can be prepared by the surveyor either after a physical inspection or from a Desktop Valuation. Needless to mention, desktop valuations have been unaffected by the pandemic situation.

Desktop Valuation is an assessment that is conducted remotely through resources that are available online and completely eliminates the requirement for a physical inspection. It is helpful for people who are unable to arrange access to the property for the surveyor or in case there are time and budget limitations. However, it is important to note that Desktop Valuations are an open-market appraisal of the property that are derived only from information and tools from online sources and can provide an estimate of the market value from a combination of information and experience since there is no physical inspection involved. On the other hand, Desktop Valuations can be completed quickly without the hassle of arranging access to the property and cutting down the time required for the physical survey.

But lately, the housing market has been unlocked with strict government guidelines, which means physical inspections can be carried out as long as everyone follows strict measures to ensure safety, such as following social distancing and good hygiene measures. A physical survey is an advisable option, provided the inspection can be carried out safely with all the protocols in place and provided you’re not self-isolating.

However, if you prefer not to risk somebody being in your property or are self-isolating then you can always opt for a desktop valuation, which can be just as accurate as a physical inspection, as under the law there are certain things the valuer must assume about the internal condition of the property and so does not necessarily need to physically inspect your property.

What should you expect during your valuation?

In order to keep up with the latest government guidelines concerning the Covid-19 situation, a few extra points need to be taken care of by the surveyor as well as the occupants to permit a safe and smooth inspection.

  • The surveyor will ensure that nothing has been changed since the appointment was booked
  • If anyone is self-isolating in the household, has been diagnosed with Covid-19 or is showing any symptoms, the surveyor will not be able to carry out the inspection and it has to be booked for a later date
  • If possible, it is safer for both you and the surveyor if you’re able to leave the house during the survey. Otherwise, you may wait in the living room while the surveyor completes the inspection. If none of this is possible, please follow the surveyor’s instructions as and when they ask you to move so the inspection can be carried out easily
  • The Surveyor will start by inspection of the outside front of the house then move to the outside rear. Following that they will move on to sides, outbuildings, garages, then completing the inside of the loft, upstairs, downstairs hall, ground floor WC and finally the living room
  • All lights must be on to reduce contact with switches
  • All internal doors, loft hatches as well as garage doors must be kept open to prevent physical contact with doors and handles
  • Social distancing measures of at least 2 metres must be maintained and any kind of physical contact should be avoided. No handshakes must be exchanged and the surveyors must be equipped with the appropriate PPE
  • Other government guidelines specific to your part of the country must also be followed

The damage inflicted by Covid-19 has been massive and is yet to be evaluated, but at the same time, it is important now, more than ever, to plan ahead and ensure that our financial positions are such that we can be prepared for such unforeseen situations in the future.

For the safety of everyone, Leasehold Valuations must be carried out with all protocols and frequent hand washing and good hygiene must be encouraged.

Factors Affecting Lease Extension Valuation in UK

If you own a leasehold property in UK and now it is the time to extend that lease, then you should be aware of the factors to be considered while estimating the cost of the lease extension. If you don’t have enough information and need guidance regarding the lease extension process or related aspects, you can reach out to our chartered surveyors. In this blog, we will take you through each factor that plays a vital role in lease extension valuation in UK
Length of the Lease: Duration of the lease not only affects the property’s value, but it also affects the cost to be incurred in extending the lease. If the lease is not extended before its length falls below 80 years, the leaseholder needs to pay a higher amount for the lease extension. In addition, lenders tend not to want to lend mortgages on such properties.
Current Market Value of your Property: This can either be the current market value of your property with the current short lease or the value with a longer lease (ie after the extension has been completed).
Location of property:  wherein the UK your property is located does have a bearing on the calculation. This is because property values in different parts of the UK grow at different rates and this is reflected in the Deferment rate applied in your calculation.
Ground Rent Payable:  the ground rent you pay throughout the term of the lease is important as the landlord must be compensated for losing this income stream once you have extended your lease (as your ground rent will decrease to Zero)
At Leasehold Valuations, we deliver the services that you can rely on. So, contact our chartered surveyors today to see how much it will cost to extend your lease.

How to save money on a lease extension?

A lease is a legal document signed by the leaseholder as well as the landlord that allows the leaseholder to occupy the property for a particular time period, as specified in the lease agreement. This document includes certain essential terms and conditions – like ground rent payable by the leaseholder, responsibilities to be fulfilled by the landlord, etc. On the other hand, a residential lease is granted for a specific time period. At the end of this time period, the property reverts to the landlord. From the moment a lease is granted, the term immediately begins to get shorter, and therefore, it is necessary for you to get it renewed within time to enjoy uninterrupted possession of the property as well as to maintain the value of the property. After setting a clear understanding of the terms, rules, and conditions mentioned in the contract, both the parties show their consent by self-attesting the lease contract.

While talking about how to save money on the lease extension, the best and only way is to get it renewed before the lease length falls below 80 years. Though the request for the lease extension can be processed with a short time period left on a lease too, the cost will be very high in comparison to the cost that would be paid with the lease length above 80 years.

For Calculating the actual lease extension cost along with identifying the measures to save money on a lease extension, you can rely on the Leasehold Valuations’ team of qualified surveyors. Our experts have recently completed a couple of lease extensions where the type of property and the capital value were quite similar; still, the cost of both the lease extensions was dramatically different. The reason behind the difference was the lease length, where one property’s lease length was 81 years, the other one had only 63 years, and therefore, the cost of lease renewal for the first property incurred £5,000 and £18,400 for the second property.

“This scenario highlights the significance of lease renewal within the right time frame, especially when you want to sell the property in the near future and expect to receive the maximum market value.”

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A complete guide for the lease extension

This guide of lease renewal will help you comply with the requirements under the Leasehold Reform, Housing and Urban Development Act 1993. In this post, you will get to learn about some basic tactics to follow in order to extend the lease while saving money. This act provides the right to the leaseholders to extend the lease by a maximum of 90 years in addition to the number of years left on the existing lease. The only key requirement you need to fulfill to avail the benefit of this act is you must have owned the property for more than 2 years and hold an existing long lease that was originally granted for more than 21 years.

Marriage Value – the 80-year rule

It is recommended to extend the lease as soon as possible because the delay will only result in increasing the cost. According to the Act mentioned above, once the lease period falls below 80 years, the cost for the extension starts increasing rapidly, thus, if you are planning to sell the property in the future and want the maximum return on your investment, you should get the lease renewed within the time frame. Moreover, the moment the lease period declines below 80 years, an additional marriage fee is payable which also increases alongside all other costs.

Furthermore, the lease is an instrument that adds value to the property if extended within the timeframe, otherwise, creates a negative impact on the property’s value. Therefore, if the lease on your property is below 80 years, then the landlord is entitled to half of the increased share of the property’s value. Marriage value is only applied to those properties whose lease falls below 80 years and this is the primary reason you should always look to renew your lease before it reaches 80 years.

Lease renewal procedure as per the Leasehold Reform Act

You should be aware that you are only responsible for reasonable costs like – legal fees and valuation costs incurred by the freeholder in addition to your own legal and valuation fees during the entire process. The calculation of a lease extension cost is a complex process, thus, you should consult with an expert to carry out the valuation on your behalf under the 1993 Act. The lease renewal cost is also known as the premium and it is calculated on the basis of what the landlord is going to lose after granting the lease extension. With reference to this factor, the surveyor you will appoint will help you design your opening offer premium while serving the Section 42 notice to the landlord. From there, formal proceedings start and the final premium is decided either through formal negotiations or failing an agreement through the Tribunal.

If your lease time period is also running low and  it is going to fall below 80 years, you should take a step towards a lease extension. To find effective ways to save costs on the lease renewal, contact Leasehold Valuations today.

How to extend the lease of a flat?

Anyone who owns a leasehold property should bear in mind that the lease should be extended before the length of the lease starts shrinking too low. The length of the lease and the cost to be incurred in extending the lease, are inversely interconnected and so as the lease term reduces the cost to extend it increases. We are going to explain certain steps to be followed to extend the lease of a flat.

How do I get a new lease granted for my flat?

As each year passes on your lease, the value of your flat/property diminishes. Therefore, it is recommended to extend the lease as soon as possible because once the lease length falls below 80 years, you need to pay an additional amount for its extension. Mortgaging or remortgaging also becomes difficult when less than 75  years are left on a lease and it may become the reason for your inability to sell the flat. All such factors also decrease the value of the flat.

How can I extend the lease of my flat?

The residential lease extension process is rather complicated and thus, it is recommended to consult an expert who could guide you in the right direction and bring in the best possible results. Otherwise, a small glitch can become very costly in terms of money as well as time.

Apart from consulting an expert, the next thing you should do is serve a Section 42 notice to the landlord and any other intermediate landlord, including your offer for the premium. In return, the landlord will respond with Section 45 notice that includes the counter offer. Eventually, both parties agree on a price to extend the lease. If either of the parties does not agree on the terms and conditions, they can apply to the First-tier Tribunal to decide on the premium amount.

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Can the landlord refuse to grant the extension?

Provided that the leaseholder and the property qualify and a valid notice has been served under the Leasehold Reform Act 1967 or the Leasehold Reform, Housing and Urban Development Act 1993, then the freeholder is obliged to extend the lease.

The landlord must serve his response within a couple of months from the date the section 42 notice was served by the leaseholder, or else the leaseholder is able to apply to the First tier Tribunal to extend the lease for the price stated in the notice.

Qualification for a lease extension

Before executing the procedure and all other formalities, one must qualify for the lease extension. Here are some of those requirements for the qualification:

  • Own an existing long lease which was originally issued for a term of at least 21 years
  • Owned a flat for a minimum of two years

How long can I extend the lease of my flat?

The lease can be extended by 90 years made under the Leasehold Reform, Housing and Urban Development Act 1993. Alternatively, the leaseholder and freeholder can mutually agree without the need to serve any legal notices. However, under this scenario the freeholder has a stronger bargaining power.

What is the best time to extend the lease?

The lease should be extended ideally with more than 80 years remaining. That means the length of the lease should be a minimum of 80 years.Otherwise, the cost of the lease extension increases rapidly.

How much I have to pay to extend the lease?

The cost to extend the lease depends on multiple internal as well as external factors, including the property size, type, the number of years left on the lease, freehold value of the property, and the annual ground rent; therefore, it is very hard to define a particular amount.

Calculating the cost for the lease extension is considered a complex process, and it is therefore recommended to go for professional valuation services by an expert who complies with the requirements of the Leasehold Reform Legislation.

The Lease Extension Guide, Costs and Procedure

If you already own a leasehold property or planning to buy one, then this leasehold extension guide is for you. It is very crucial for you to gain adequate information about the lease extension process and your legal rights in order to make the informed decisions for the property and save a thousand pounds.

Let’s discuss what is a lease extension?

A lease extension is simply a process to add some years to your existing lease of your leasehold property. A Leasehold property is not owned outright. It is owned by the freeholder but your lease gives you the right to own it for a fixed period of years (the term of your lease). Once your lease expires the property reverts back to the freeholder and you no longer have any rights to the property.

Once the original lease has been agreed the leaseholder is liable to pay annual ground rent that is set out in the lease document.

Now let’s discuss what is a lease?

A lease is an agreement between you (leaseholder) and your landlord (freeholder). The lease can be for any number of years but is usually between 21 and 999 years long. The lease contract includes rules, regulations, rights as well as obligations of the leaseholder as well as the freeholder.

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Does the length of lease affect the property’s value?

Yes, the duration of the lease affects the property’s value. The primary reason behind this is the number of years left before lease expiration. The lower the number of years , the lower will be the value of the property and the sooner the property will revert back to the freeholder. However, you as a leaseholder have the right to extend the lease, but when the lease is near to its expiration, getting it extended becomes very costly. Furthermore, The lower the number of years the harder it can get to get a mortgage from a bank.

When is the perfect time to extend your lease?

There is no perfect time to extend the lease, however, the lower the length of the lease, the more expensive it will be to extend. Therefore, you should take appropriate steps to extend it sooner rather than later. But there is a point where leasehold renewal becomes really significant and that is at 80 years. The moment your lease  falls below 80 years, the cost of the lease extension will start increasing. This is because at this point the leaseholder has to pay an extra amount known as marriage value on top of the lease extension premium.

How to calculate the cost to be incurred on lease extension?

The process to lease extension  is defined under Scheduled 13, Part II of the Leasehold Reform, Housing and Urban Development Act, 1993. The premium amount is payable to compensate the landlord against the reduction in the value of the interest in the property as he will have to wait longer to regain control of his property In order to determine the cost of a leasehold extension, the following factors need to be considered, however, these are not limited to the following:

  • Current market value of the property
  • Number of years left in the lease extension
  • Ground rent payable
  • Value of the property after the lease is being extended

The best way to extend your lease is to get a Chartered Surveyor to value the premium for you. Although, there will be a fee payable, you will get the best advice and the adequate guidance to extend the lease at minimum cost and without any complications. At LeaseHold Valuations, we Provide professional service and walk you through the process in order to make this process less painful and to get you a better deal.

What is Leasehold Property and why does it Matter?

Most of the people are aware of the terms like renting a property and owning the property, but very few know what a leasehold property is, how to go through the lease extension valuation process, etc. Under  leasehold ownership, you lease (rent) property for a long period, often for 90 or 120 years or even 999 years, unlike rent agreements which are mainly for a year or two.

  • A leaseholder has a contract with the freeholder that sets down the legal rights of either side.
  • The freeholder is mainly responsible for maintaining the common parts like – hallways, corridors, walls, roof, staircase, gardens etc.
  • Leaseholders are responsible for paying an annual maintenance or service charge along with their share of the building insurance.
  • Leaseholders are liable to pay rent of the leased property on a monthly or yearly basis to the freeholder.
  • leaseholders are required to obtain permission from the property owner for any major alterations to their property.
  • In any case, if leaseholders fail to pay the amount stated in the contract, the lease can be forfeited.

Although a lease is for a very long time it will reduce over time and therefore, there will come a time when the lease length will need to be extended. leasehold property valuation, the extension of leasehold property, So, what is the benefit of extending your lease?

Let’s discuss in detail whether a leasehold property is a right fit for you or not:

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How does a leasehold property operate?

With a leasehold agreement, the property owner, who is also known as the freeholder, grants  permission to the leaseholder to live in the particular property for a particular time period. During this time (known as “Term”) the leaseholder is required to pay the freeholder a rent (known as “ground rent”) usually on a quarterly, six monthly or annual basis. The advantage of owning a leasehold property as opposed to renting one (on as Assured shorthold basis) is that the leaseholder  can improvise or modify the property according to their needs because the lease is for a long span of time.

Leaseholders can even sometimes renovate or build a whole new building on the land and rent separate units. At the end of the lease, the property must be returned to the freeholder

Benefits of a Leasehold Property

  • There are a few noteworthy benefits for the potential owner with regards to the leasehold properties such as leasehold properties are less expensive compared to the purchase of the freehold.
  • Furthermore, the leaseholder can sell the same lease to a third person even without taking permission from the property owner.

How do I know whether my property is leasehold or not?

If you are unsure that your property is leasehold or not, you should ask your solicitor or directly ask the property owner. Previously, leaseholds used to be aligned with flats, however, now newly built houses, as well as the buildings are sold as leaseholds too. In England, almost 4.2 million homes are registered as leasehold apartments and most of them are newly constructed city apartments. However, the UK government has intervened followed by banning the ‘unjustified use of leasehold in new-houses’.

What happens when the lease ends?

The moment your lease period will end, the property owner will again own the property, regardless of the amount you have paid during the lease period or you have paid the mortgage amount in full. That means that even if you were living in that property for a very long period, let’s say for 80 years,  you will not  have anything to show at the end of the lease.

How can I extend the leasehold period?

There is legislation which protects the leaseholders’ interest. Providing the original lease was for a minimum of 21 years then you can extend it for 90 years more. Moreover, if you live in a house and it is a leasehold property then, you have the right to extend the lease for 50 years, while following certain conditions.

At LeaseholdValuations, we can help through this minefield to extend your lease.

 Don’t struggle and talk to our experts now!

A complete guide to choose an expert to evaluate the value of your leasehold extension

Leasehold extension is a bit of a lengthy and complicated process that includes cost estimation and getting the right expert to take care of every single step engaged in the lease extension process while avoiding every possible pitfall. Therefore, if you are also considering extending the lease, then probably the first question that comes in your mind is ‘How much it will cost?’ Unfortunately, it is not at all possible to estimate the exact cost to be incurred in extending the lease at the beginning of the process. Hence, let’s discuss this in brief:

Who can apply for a lease extension?

To apply for lease extensions, homeowners must:

  • Own a lease, which was originally granted for  at least of 21 years in length ; and
  • Have owned the property for a minimum of 2 years;

There are a few exceptions such as commercial or business leases as well as the properties which are a part of a charitable housing trust.

How to calculate the value of leasehold extension?

The cost of a leasehold extension depends on  multiple factors such as the value of the property, the annual ground rent, the number of years left on the lease and the ground rents payable during the term of the lease Therefore, it is necessary for you to contact an expert to calculate the value of the residential lease extension.

How to choose an expert and why you should consult one for leasehold extension?

The legal procedure around the leasehold extension is complicated and thus, requires an adequate understanding of the laws and regulations surrounding leasehold enfranchisement to manage the process successfully. As this area of law is a minefield, you will require an expert who can assist you at every single step along the way  

The residential leasehold extension surveyor will help you produce a valuation report, which will calculate the premium payable for a lease extension. Every leasehold extension has numerous debatable variables and only an expert with the experience in leasehold law can be able to handle such debates and negotiate on your behalf. Now the question arises, how to choose an expert who could help you calculate the value of the leasehold extension? The answer to this question is:

  • You should choose an expert who has sufficient knowledge of leasehold law and other related  rules and regulations
  • Check whether the specialist you are going to hire is competent to estimate the local property values or not
  • Check the expert’s previous experience including  the following:
    • Is the expert a member of the Royal Institution of Chartered Surveyors (RICS)?
    • Does the expert have a clear fee structure or not? (does he charge on hourly basis or project basis)
    • Does the expert have enough knowledge about the geographical location of the property?
    • Does the expert have an online presence and has an active website?
    • Does the expert clearly and effectively communicate with you?
    • Is the expert ready to provide evidence before a Tribunal?
    • How many times the expert has appeared at a Tribunal?
    • Does the expert mainly act for freeholders or leaseholders?

The role of chartered surveyor for the lease extension

The above mentioned points already describe the significance of professional advice and consultation in the lease extension process. Let’s throw light on the role of chartered surveyor for lease extension:

An expert should be able to:

  • Evaluate the value of the leasehold extension in line with schedule 13
  • Help you know how much to offer landlord in the tenant’s notice
  • Help you know how to respond to the landlord’s counter notice
  • Negotiate on your behalf with the landlord

Therefore, it would be strongly advisable  for you to appoint an expert to extend your lease because a valuation surveyor should  have good knowledge of the leasehold law and local property market. Moreover, we have come up with a chronology of steps to execute to make the leasehold extension process easy and effective:

Secure the future of your property with Leasehold Valuations.Leasehold Valuations in Slough UKSecure the future of your property with Leasehold Valuations UK

Step 1: Appoint a chartered surveyor for lease extension who is a member of the RICS

Step 2: Ask your solicitor to serve a formal notice on your landlord based upon the valuation received by your surveyor  

Step 3: Once the counter notice is received from your landlord ask your surveyor to negotiate the premium payable.

Step 4: Once the premium has been agreed, ask your solicitor to complete the new lease.

At Leasehold valuations, our specialists handle a large number of lease extension cases in the UK every year. Hence, we are familiar with such cases and can help you make the most of your hard-earned money while making the lease extension process transparent and hassle-free.

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