RES Property Surveyors specialise in lease extension and freehold valuations for both freeholders and leaseholders. We are a member of ALEP (Association of Leasehold Enfranchisement Practitioners) and our team is comprised of RICS-regulated valuers and surveyors.
For advice on when to extend your lease or to learn more about the process, get in touch with our professionals today.
Should I extent my lease?
As a leaseholder, choosing whether to extend your lease will depend on how long your existing lease currently has unexpired. If your lease has less than 90 years left, it’s a good idea to consider extending as properties with less than 80 years are difficult to mortgage and therefore are more difficult to sell. Extending a lease of less than 80 years also incurs much higher costs due to the marriage value being payable.
What is a statutory lease extension?
A statutory lease extension is the formal process of extending a lease. It is made under the Leasehold Reform, Housing & Urban Development Act 1993 (1993 Act) and is started by the service of a Section 42 Notice (Notice of Claim) served by the lessee on the freeholder.
What is an informal lease extension?
An informal lease extension is a deal agreed with the freeholder outside the framework of the 1993 Act. It is usual for the freeholder to maintain or even increase the ground rent payable and maintain some reversionary value by setting the extended lease term at 99 or 125 years (as opposed to 90 years plus the current unexpired term under a statutory extension); the freeholder does this in exchange for a lower premium (cost).
Choosing between the informal and statutory routes will depend on the willingness of the freeholder, your relationship, finances and other circumstances. RES Property Surveyors Ltd provides a comprehensive service which will price all informal offers and does so alongside a statutory lease extension, so that the client has the cost/benefit analysis they needs to make a fully informed decision on the fundamental economics of each option and the implications.
Does a lease extension add value?
Extending the lease on a property can add value as this makes the property easier to mortgage. Many lenders have limitations on lending below 80 years so agreeing an extra 90 years on your lease can make it easier for buyers to secure a mortgage at the proper value of the flat.
Can a lease extension be refused?
After having a lease extension valuation from a RICS-regulated valuer, you can serve a Section 42 notice to the freeholder of your property with an offer advised by your solicitor. The freeholder must then provide a counter notice within two months before negotiations begin. If neither party can reach an agreement within six months, the lessee can apply to the First Tier Tribunal to reach an impartial decision.
How much will it cost to extend my lease?
Extending your lease can be an expensive process but will ultimately depend on your individual circumstances. The leasehold extension formula used to calculate the costs you will pay to the freeholder considers what the landlord might lose from a value perspective, compensation for losses from the new lease and the marriage value.
Elements that will be considered to work out the premium paid to the freeholder include the current remaining lease length, ground rent, reversion value and marriage value. The marriage value is the difference between the existing values of the freeholders and leaseholders interests before extension ad after extension. The marriage value is then split 50/50.
Under S.60 of the 1993 Act the costs for the valuation investigation fall on the leaseholder.
How long does the extension process take?
Once the Section 42 Notice is issued by the leaseholder, the freeholder has two months to serve a counter notice. Negotiations can take up to six months from this point before an application to the First Tier Tribunal will be necessary.
What can RES Property Surveyors do?
RES Property Surveyors is able to complete the professional lease extension valuation and advise leaseholders on how to approach the process. Our experts provide extensive, up-to-date information about the valuation and are confident negotiating within the timeframe outlined by the 1993 Act.
For freeholders, RES Property Surveyors can provide accurate valuation and advice with which to produce a counter notice to a Section 42 Notice to ensure the interests of the freeholder are protected and prioritised throughout the negotiation process.
RES Property Surveyors have also represented many clients in tribunal. Our team often undertake the role of both advocate and expert where a client wishes not to instruct Counsel.
Speak to an Expert
For comprehensive advice as a leaseholder or freeholder, get in touch with RES Property Surveyors today.