What is a leasehold extension?

A leasehold extension is the process of extending the lease term of a property held on a leasehold basis. It helps maintain the property's value and desirability. Leasehold extension legislation allows leaseholders to extend their lease, ensuring the property remains attractive for sale or mortgage purposes.

How long is a leasehold extension ?

The length of a leasehold extension can vary depending on the jurisdiction and specific circumstances. In some countries, such as the United Kingdom, leasehold extensions are typically granted for an additional 90 years beyond the remaining term of the existing lease. However, it's important to note that leasehold extension regulations can differ, and it's advisable to consult local laws or seek professional advice like leasehold valuations for accurate information regarding leasehold extensions in a specific jurisdiction.

What are the benefits of lease extension ?

Extending the leasehold of a property offers benefits such as increased property value, improved marketability, easier access to mortgage financing, peace of mind and security, the avoidance of escalating costs, and more control over property management.

What happens to leasehold property after 99 years ?

After 99 years, the leasehold property typically reverts back to the freeholder, unless the lease is extended by the leaseholder. The ownership of the property, along with the land it is built on, returns to the freeholder once the lease expires. As a lease approaches its expiration, the property’s value may decrease, making it more challenging to sell or mortgage. It is advisable for leaseholders to consider extending their lease well before it reaches the 99-year mark to maintain the property’s value and their ownership rights.

Why choose leasehold Valuations for Lease extension or Buying Freehold ?

1. Fair Price: A leasehold valuation ensures you pay a fair price for a lease extension or freehold purchase.2. Increased Property Value: Extending the lease or buying the freehold can potentially increase your property’s value.3. Cost Savings: Accurate valuation helps minimise future costs like ground rent.4. Stronger Negotiation: A valuation report strengthens your position during negotiations with landlords.5. Legal Compliance: Valuations ensure you meet legal requirements for lease extensions or freehold purchases.6. Future Planning: Valuations help you plan for selling or passing on the property to future generations.7. Expert Advice: Engaging a valuer provides access to their expertise and guidance.8. Mortgage Support: Valuation reports improve your mortgage opportunities for lease extensions or freehold purchases.

How much does it cost to renew a leasehold ?

The cost of renewing a leasehold in the UK can vary depending on various factors, such as the property value, the length of the renewal term, and any negotiations between the leaseholder and the freeholder. Unlike extending a lease, which typically involves paying a premium to the freeholder, renewing a lease generally involves paying a nominal fee known as a “peppercorn rent” or a small percentage of the property value.The exact cost of renewing a leasehold will depend on the specific terms agreed upon between the parties involved. It is advisable to consult with a solicitor or a licenced conveyancer who specialises in leasehold matters to get an accurate estimate of the costs involved based on your particular situation.

Q. How much does it cost to extend a leasehold in uk ?

The cost of extending a leasehold in the UK can range from a few thousand pounds to tens of thousands of pounds, depending on factors such as the remaining lease length, property value, and negotiated terms with the freeholder. Additional costs include legal fees, valuation fees, and disbursements such as Land Registry fees. It’s recommended to seek professional advice for an accurate estimate based on your specific situation.

Share of Freehold Lease Extension: Process, Costs, and Considerations

January 24, 2024

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Introduction

Embarking on the journey of extending your share of freehold leases requires a thorough understanding of the process, associated costs, and crucial considerations. This comprehensive guide aims to demystify the complexities involved, offering valuable insights for homeowners seeking to navigate this pivotal aspect of property ownership.

The Share of Freehold Lease Extension Process

1. Agree with Share of Freeholders

Collaborate with fellow freeholders to initiate the extension process, emphasising consensus.

2. Instruct a Solicitor

Engage the services of a solicitor to craft a new lease, ensuring a seamless and informal extension.

3. Draft Deed of Substituted Security (if applicable)

If a mortgage is in place, facilitate compliance by drafting a Deed of Substituted Security.

4. Submit and Sign

Present the new lease for signatures, involving both shares of freeholders and the leaseholder.

5. Surrender and Land Registry Submission

Formalise the extension by surrendering the old lease and submitting the new lease to the Land Registry for official registration.

6. Navigating Complexities

Understand potential challenges, especially when the share of freeholders is in disagreement or if one is absent, requiring a vesting order.

Why Extend Your Share of Freehold Lease?

1. Increased Value

Elevate the value of your individual lease through a well-executed extension.

2. Remortgage Facilitation

Facilitate remortgaging opportunities, a hurdle with a ‘short’ lease.

3. Improved Sale Potential

Enhance the property’s appeal for potential buyers, streamlining the sale process.

How to Best Prepare for the Extension

1. Secure Share of Freeholders’ Agreement

Obtain unanimous agreement from other share of freeholders before proceeding.

2. Joint Solicitor Appointment

Confirm the joint appointment of a solicitor to represent both freeholder and leaseholder, minimising legal costs.

3. Lease Extension Terms

Clearly define the desired lease extension terms, including considerations like 999 years and peppercorn rent.

The Extension Process in Detail

1. Undertaking from Share of Freeholders

Secure a commitment from other shareholders of freeholders for joint solicitor representation.

2. RICS Valuation (if required)

Consider a RICS valuation if a premium payment is anticipated, ensuring fairness in financial aspects.

3. Lease Format Options

Choose between an entirely new lease or a deed of surrender and re-grant, aligning with the specific requirements of the property.

4. New Lease Drafting

Entrust the solicitor to draft the new lease, ensuring uniformity in key aspects throughout the building.

5. Lenders and Mortgage Deeds

Comply with Land Registry requirements, signing a deed of substituted security or a new mortgage deed if applicable, ensuring lender consent.

Free Initial Leasehold Advice

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Lease extension
Purchasing leasehold, freehold, or share of freehold
Selling a leasehold property with a short lease
Simultaneous lease extension and sale

Benefit from our specialised team, including RICS valuers for premium negotiation and surveyors for section 42 notice and formal or informal lease extensions.

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RICS Lease Extension Valuation,
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Do you have to pay stamp duty on a lease extension?

While lease extensions are typically exempt from stamp duty, exceptions apply. Professional consultation is recommended for clarity on tax obligations.

How much time does it usually take to complete a share of a freehold lease extension?

With lender and share of freeholder consent, anticipate a timeframe of approximately (4-6 weeks), subject to individual circumstances.

What are the potential costs involved in extending a share of a freehold lease?

Costs vary widely, ranging from a few thousand to tens of thousands. An RICS freehold valuation is recommended for accurate estimation, factoring in legal fees, surveyor costs, and potential premiums to other freeholders.

What happens if your other share of freeholders refuse to allow your lease extension?

In case of share of freeholders’ refusal, be prepared for a formal statutory route, potentially involving court proceedings. Difficulties in locating other share of freeholders necessitate a Vesting Order, involving demonstrated efforts and adherence to time limits.

Conclusion

Navigating the share of the freehold lease extension process demands careful consideration and informed decision-making. Armed with insights into costs, essential steps, and potential challenges, homeowners can confidently navigate this crucial aspect of property ownership.