Why extend your lease?
In almost all cases, your lease runs for a period or term of 125 years from the date the first flat in your building was sold. The amount of time left is sometimes known as the ‘unexpired term’. The value of your property decreases as the term of the lease gets shorter. At the end of the lease term, you have to return your flat to the council as the landlord.
If your lease has less than 99 years remaining then you might think about extending the lease. This is particularly important if your lease has just over 80 years remaining, as lease extension becomes much more expensive when a lease falls below 80 years.
As the number of years on the lease runs down, this may also eventually affect a leaseholder’s ability to get a mortgage against the property. The Council of Mortgage Lenders says that it may be difficult to get a mortgage where the lease has less than 60 years left to run.
We can give you general advice about extending your lease, but we cannot tell you what you might have to pay for it. You can get an estimate by using a calculation tool you can find on-line, for example on the LEASE website or at Money Saving Expert.
Who can apply to extend their lease?
To be able to extend your lease, you must have owned your flat for at least two years. You then have the right to purchase a new lease for a term of 90 years on top of the number of years left on your existing lease. Your extended lease will have very similar conditions to your old one.
If you do not qualify to apply to buy the freehold under the ‘enfranchisement’ rules, or if there are not enough people interested in buying the freehold this way, you can still apply on your own to extend your lease as long as you have owned your flat for two years.
You will have to pay to extend your lease, so you will need to think very carefully if it is going to be worthwhile doing this.
You have to propose the price you think you should pay. You will also have to pay our costs as well as your own legal and valuation costs.
What you have to do?
If you decide to apply to extend your lease, you will need to serve us with a formal notice. Please send your formal notice to Legal Services, 7 Newington Barrow Way N7 7EP.
This has to include certain information, including what you think you should pay to extend your lease. We strongly recommend you get professional advice first. Serving the notice commits you to paying our costs, so it is important to think things through beforehand.
The notice gives us at least two months to respond but, as soon as you have served the notice we can ask you to pay a deposit which would be 10% of the amount you think you should pay to extend your lease, or £250, whichever is greater.
We can visit your property on giving you advance notice in order to carry out a valuation to use in negotiations.
We have to respond to your formal notice by serving what is called a ‘counter notice’. In this notice we will either accept your proposed price or say what we think you should pay. Negotiations will then follow, and if after certain time limits there is no agreement, either side can apply to the First Tier Tribunal (Property Chamber), who will make a decision which will be binding on both parties.
You can get information and advice from the LEASE, the independent leasehold advisory service.
149 Tottenham Court Road
London W1T 7BN
Phone: 020 7383 9800