The lease extension process explained.
If you need to extend your lease, the process can be expensive, lengthy and complicated, Having an overview of the process is handy as it helps you understand what is going on.
Costs and negotiation of lease extensions.
To work out the cost of extending the lease there are many factors that need to be considered, lots of these will be opinions, including how much the property is worth, what is it like as an investment, but some are based on facts like the term of the lease.
All of these factors are then worked into a complicated formula and bingo you have a figure - well yes and no.
As a few of these figures are opinions outcomes can vary, therefore the value of the lease extension is open for negotiation and if that negotiation fails, you have recourse to a tribunal.
Do not pay over the odds for a lease extension, seeking advice on negotiation can save you a lot of money.
So that is just the fee to extend the lease payable to the freeholder in addition to this you will have your solicitor’s fees and the legal fees for your freeholder, professional fees such as surveyor.
In total these will not be insignificant sums, so it is worth obtaining a few quotes.
But do I need to use solicitors?
Well, it is possible albeit mad; you could be putting your home at risk and end up paying £1000’s over the top to the freeholder.
If you go down the informal lease extension path the freeholder can make changes that benefit them, normally by either increasing the ground rent, under the formal route the ground rent will disappear or changing the lease to 99 years rather than 90 years plus what you have left.
Always use the formal route to lease extensions.
The process of extending your lease.
Speak to a solicitor and get some advice plus an indication of costs, find out what experience they have in extending leases and what they do about negotiations.
Either you or your solicitor will need to advise the freeholder and inform them that you wish to extend your lease.
You will need a surveyor that understands what you are doing and the local market.
Draw up an offer figure, take your time on this and make sure you evidence the figures you have used in your calculations.
Pay the deposit, you may be required to pay a deposit of 10% of the lease cost, so speak to your solicitors and find out how much that will be, in some cases, they can reduce the deposit.
There is a very strong possibility your freeholder will refuse your first offer and you will have to negotiate if all else fails you can go to tribunal but that will be time-consuming and an additional expense, so unless you have to, try to avoid a tribunal.
This whole process can take a time, up to a year in some extreme cases it all depends on the speed of the professionals you employ and the negotiation, so leaving it to when you move can be a problem.
Before you enter into the process of extending your lease you should consider buying the freehold, your solicitor will be able to discuss this option with you.
New Legislation.
The Government is undertaking a review to simplify and reduce the cost of extending or buying the freehold on a leasehold property if you find yourself in this situation speak to your solicitor about any potential changes as a six months wait may be sensible.