What is a long lease and what is a short lease?

For leasehold owners of flats (as well as houses), simply put, a residential long lease is a lease that runs for a duration of more than 21 years when it was originally granted. Although, most flat owners will have residential leases that run for 99, 125 or even 999 years (which normally comes with a share of the freehold)!

Even though more than 21 years is deemed a long lease technically speaking, most banks will not lend on a lease that is lower than 80 years. Therefore, leaseholders find themselves in a strange limbo if their lease falls below 80 years.

So, a lease is typically considered ‘a low or short lease’ if it falls below 80 years.

Who can extend their lease?

Any leaseholder of a long lease who has been the owner for two years or more. Owners of leasehold houses can also extend their lease too! As long as they have also owned it for two years. Sadly, the following cannot extend their leases:

• Leaseholders of shared ownership properties (who have not staircased up to 100% equity ownership)
• Those who have Protected Tenancies (although it is rare to find these types of tenancies nowadays)

Why do I need to extend my lease?

Because a lease is a depreciating asset and the shorter the term of years, the lower the market value of your property and the more expensive it is to extend your lease. Sadly, leasehold properties do not retain their value forever and a day ☹.  But, chin up, all is not lost… 😊

When do I need to extend my lease?

If the above answer is correct (which it is) then you definitely do not want to wait until it drops below 80 years as you will pay more for your lease extensions (by what is known as marriage value). Essentially you need to crack on with it at the 82-85 year mark, but no lower than this ideally.

What are the costs involved in extending my lease?

The typical costs involved are as follows:

• Your valuation fees (normally incurred by your surveyor)
• Your solicitors’ fees
• Your landlords’ valuation fees (normally incurred by their surveyor)
• The landlords’ reasonably incurred solicitors’ fees (this should normally mirror your solicitors fees give or take a couple of hundred pounds).

Normally, if the landlord and leaseholder can reach a good middle ground on the price then that should be it! But… and there is a big BUT, if a barney kicks off about the price payable, it could end up in a Tribunal with a judge having to decide how much the leaseholder pays for the lease extension (how much will that cost? The guess is yours!).

How do I extend my lease?

For starters you will need to get a valuation done in order to know how much it is going to cost you. The calculations will depend on whether you are going down the statutory route or the open market route. There are two ways you can extend your lease. Either ‘Statutorily’ or on the ‘Open Market’.

The statutory route of accomplishing a lease extension is governed by the Leasehold Reform Housing & Urban Development Act 1993 (LRHUDA) and provides protections for leaseholders as well as the landlord – as long as the leaseholder has owned the flat for two years, the leaseholder is entitled to an additional 90 year top-up and a reduction of the ground rent to nil. LRHUDA also provides a formula for how a lease extension is calculated. On the other hand, the Open Market route is more flexible and often quicker; with both the tenant and landlord free to negotiate the term and price of the lease extension. A leaseholder will not normally expect to get a ground rent reduction to nil if negotiating on an Open Market basis.

To find out more download our Free Nutshell Guide on lease extensions here.

Where do I go to start the lease extension process?

A good leasehold calculator (check out the Leasehold Advisory Service lease calculator) and/or a good surveyor (if your leasehold property is a bit more complicated) will do the trick. Next, you will need a jolly good solicitor who knows what they are doing… Could that be us? 😉…

There are lots of preliminary checks to be done, prescribed notices to be served and strict milestones to be met.

Still have further questions? Call our fast and efficient team of lawyers today on 0203 627 9727 or drop us an email at info@hillarycooperlaw.co.uk and we will book you in for a free 30-minute initial consultation with one of our highly qualified solicitors.