A Simple Guide To Extending A Lease

For many leaseholders, extending a lease sounds like a huge and daunting task. Human nature being what it is, there's a great temptation to put it off - which can lead to some very serious and expensive consequences. However, lease extension isn't an impossible challenge. It's a very straightforward process, that can be broken down into easily managed stages. If you've ever felt overwhelmed at the mere thought of extending a lease, here's a step by step guide to lead you on to success!

Step 1 - Why Bother?

The first thing that it's important to appreciate is that it is in your best interests to extend your lease. Your property represents a considerable financial investment on your part, and it can be seriously jeopardized by allowing the lease to run down. Short lease properties are much harder to sell, and therefore worth much less on the open market. If your lease ran down completely, of course, you'd no longer own your property at all, and you'd become a tenant in your own home.

Step 2 - Weigh Up The Costs

Having decided that extending a lease is the right course of action, you need to get an idea of the costs involved. This does mean you need to relax even with the prospect of uncertainty as there are no set rules for this. The value of a leasehold extension is determined by the level of compensation the landlord is entitled to, for loss of ground rent on the original term, and for the additional delay in taking complete possession of the property. This will be entirely based on local conditions and property prices.

Something to look out for is the "marriage value" - basically a share of a notional increase in value on a property with an extended lease, that's paid as a 50% premium to the landlord. This can significantly increase the cost of an extension, so it's something that you need to avoid wherever possible. The positive news is that this 'marriage value' does not effect leases with more than 80 years left on the term, so if an extension is done quickly, it wont be an issue.

Step 3 - Work With Professionals

You'll need to work with a valuer, generally a surveyor, who will help you to determine the actual value of the extension. You'll also need to work with a solicitor. Legal advice is vital for every single step of this procedure. A specialist solicitor with significant experience of lease extension work will be able to talk you through your options, prepare all the information you need to apply for an extension, serve notice on the landlord, liaise between both parties and sort out the new lease, once it's granted.

Although extending a lease requires time, effort and initial outlay, if you keep a clear head and work through the process step by step, you'll eventually succeed - and the end achievement will be worth the effort.

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