LEASE EXTENSION

What is a lease extension?
Normally the shorter a lease gets the more the value of a property falls. In fact, many mortgage lenders will not lend on properties with under 80 years remaining on the lease. A short lease can thus be troublesome if you wish to sell the property or re-mortgage. A lease extension helps resolve the scenario, enabling the full value of the property to be realised. Naturally a cost is involved in respect of extending the lease. Birley Steele Lightfoot have significant experience of calculating these costs in accordance with the legislative process.

Can I extend my lease?
Firstly you should establish if you are eligible under the legislation. The Leasehold Reform Housing and Urban Development Act (1993) gives owners of leasehold properties the right to extend their lease by an additional 90 years.

The right to extend is subject to certain qualifying criteria.
These include: –
 Having owned the property for at least 2 years.
 Having owned a long lease (with an original term of at least 21 years).

If the freeholder is a charitable Trust and the property is provided as part of the functions of the charity this entitlement is not normally valid. That said we have carried out a significant number of lease extensions on Housing Association properties where the freeholder has been happy to follow the legislative process. Please note commercial leases are exempt from the Act.

When should I extend my lease?
If eligible it is recommended that you extend your lease as soon as possible, this normally lowers the cost involved in the process. In fact, when the lease term reaches 80 years or less you have to pay what is called “Marriage Value”. This can be a significant amount and increase the cost of the lease extension. It is therefore recommended that you extend the lease prior to reaching the 80 year term remaining mark. We do appreciate in some circumstances the lease will already be below this term but again the sooner the lease is extended it should mean that the extension costs will be lower.

Calculating the costs of a lease extension
Birley Steele Lightfoot Surveyors have significant experience of calculating the costs involved in a lease extension. We undertake work on behalf of tenants, landlords or as joint instructions. If you are considering extending a residential lease please do hesitate to contact us for further advice and/or a quotation for carrying out the work on your behalf.