Lease extensions
Additional Information for tenants
Your lease, like many other large purchases you make, is a diminishing asset. You will want to avoid the depreciation in value of your property, and a lease extension reverses this process.
AS OF 31ST JANUARY YOU NO LONGER NEED TO HAVE OWNED YOUR PROPERTY FOR TWO YEARS TO BE ELIGIBLE TO EXTEND YOUR LEASE.
The Leasehold Reform Housing and Urban Development Act 1993 (as amended) entitles you to an extension to your lease under the following terms:
- An additional 90 years on top of the existing lease term (e.g. if your lease has 77 years left then your new lease will have a terms of 167 years)
- at a zero ground rent
A valuation of the property will help determine the reasonable amount of money (the premium) you should pay the landlord for the extension of additional 90 years.
When I calculate the value of the lease, I consider the relevant legislation and case law.
You must also bear in mind that in addition to your own surveyor and solicitor's costs you will also be responsible for the reasonable professional fees of the freeholder.
I regularly negotiate terms for clients and lease extension premiums and costs are usually agreed without dispute. However, if necessary, I am able to provide expert witness evidence before a First Tier Tribunal to assist with the determination of the premiums.
Remember
Under the terms of the Leasehold Reform Housing and Urban Development Act 1993 (as amended), tenants must pay the reasonable professional fees of the freeholder.
HOWEVER:
The government are currently working to make it cheaper and easier for tenant's to extend their lease and/or purchase their freehold. It is advised you consider the potential impact of the Act prior to commencing a lease extension or freehold purchase.
The provisions of the Act are not yet commenced and a number of Freeholder's are challenging the Act claiming infringement of their Human Rights.