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.
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.