Lease Extension Process - Answers To The Most Frequently Asked Questions

A lease extension will usually ensure that your property is more valuable and saleable should you want to sell or remortgage.

Although there are costs involved, buyers are often put off by short leases and mortgage companies generally avoid granting loans on properties with leases shorter than 60 or even 70 years.

What are the main qualifying criteria?

Under the Leasehold Reform (Housing and Urban Development) Act 1993 qualifying tenants of flats have a right to a lease extension from the landlord. The lease must have been granted for a term of more than 21 years and owned by you for more than two. The legislation does not apply to some landlords such as the Crown, National Trust and charitable housing Trusts, although the Crown usually complies with the principles of it.

How much will I have to pay?

Valuations are complex but primarily based on ground rents, yields and the length of the unexpired term, which if less than 80 years at the date you serve your Notice on the landlord must include an additional payment [known as the marriage value] payable to them.

How long does it take to extend a lease?

The entire process could take anywhere from six weeks to 12 months, mainly dependent on the cooperation and speed of response from your landlord and his solicitors, but also on the efficiency of you, your own ease extension solicitors and your surveyor.

Is it necessary to have a valuation?

It is highly advisable to obtain a formal valuation [prepared by a specialist lease extension surveyor] as you must specify a price in the Initial Notice -- if the price is unrealistic this could lead to your Notice being declared invalid.

How many years will my lease extension be for?

90 years in addition to the unexpired term of your existing lease.

Will I still have to pay ground rent?

No further ground rent should be payable.

What is the next step if the Tenant's Notice is invalid or withdrawn?

Another claim cannot be made for a further 12 months and the landlord will be entitled to their associated costs.

Can the landlord insist on payment of a deposit?

Yes, at any time following receipt of the Tenant's Notice. However the tenant may give notice to the landlord for the return of the deposit if it is withdrawn, minus the landlord's costs.

How does the landlord grant the new lease?

On payment of the premium and any outstanding service charges and ground rent. The landlord then prepares a draft lease which the tenant can comment on and make amendments to.

What other costs must I pay?

The cost of your own lease extension solicitors and surveyors fees, Stamp Duty Land Tax, Land Registry fees, search fees and barrister fees in some more complex cases. Estimates should always be obtained, however the final costs will depend on the complexity of the transaction. If you serve notice on your landlord you are also liable for their reasonable costs, such as obtaining a valuation of your flat and negotiating and granting you a new lease.

What happens if the Landlord disputes my entitlement to claim or we cannot agree on the price?

Unresolved disputes are referred to the Leasehold Valuation Tribunal (LVT) and, in the unlikely event that the landlord disputes the claim, you must apply to the court. The leaseholder is not liable for the landlord's costs in respect of any proceedings before the LVT unless they determine that you have acted unreasonably, but this is very rare and awards are very limited.

Do I have to wait two years before I can claim a new lease?

Yes. If however you are in the process of buying a flat and the vendor has owned it for more than two years, they can serve a claim notice and transfer the rights under that claim to you when you complete the purchase -- you will then be liable for their costs.

Leasehold extension is a highly complex area of the law. If you're considering extending your lease, it is essential that you appoint specialist lease extension solicitors to ensure you get the right advice from the outset.

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