Sussex Lease Extensions Blog

How much do Lease Extensions Cost?

Posted on 11/09/13, filed under Lease Extension Advice, Lease extensions, Statutory Lease Extensions

Are you aware of the unexpired term left on your lease? Losing track of the length of your lease could land you with a bill for thousands of pounds. The sooner you can extend the better, saving you money and stress further down the line.

The cost of extending the lease will depend on a number of variables, the top three contributing factors being:

• The value of your property
• Your annual ground rent
• The number of years remaining on the lease

The cost of a lease extension increases dramatically as the number of years unexpired shortens. Leases with less than 80 years left on them become much more expensive to extend – and this is exactly what freeholders hope for.

Once a lease has dropped below 80 years unexpired the cost of the lease extension increases significantly as marriage value becomes payable. Marriage value is the extra value created by extending a lease the lease extension will add to your property, on top of the cost of extending the lease itself. If your lease extension has around 85 years left, it is time to start researching what you can do to minimise the financial impact of extending.

In addition to the premium you will have to pay the freeholder for the lease extension, there are a number of fees payable as part of the process which include:

• Your own Legal fees and Valuation fees.
• Freeholders Legal and Valuation fees which are recoverable under the legislation. These however are limited to the freeholder’s valuation fee and legal fees of dealing with the Notice and Counter Notice and drafting work of the new lease.
• Tribunal costs should an agreement not be reached. You will have to bear the costs of your professional advisors preparing for and attending a tribunal hearing. Such cases are however fairly rare particularly as freeholders cannot recover any of their costs from the leaseholder.

To give you a very rough idea of the cost of extending your lease, there are some on line calculators. Try this one from the Leasehold Advisory Service.

When applying for lease extensions you should always seek expert valuation and legal advice, on how to proceed. If you would like more information speak to the experts at Sussex Lease Extensions by calling us now on 01903 872 211.

The History of the Leasehold Reform Acts

Posted on 21/08/13, filed under Lease extensions

Over the last 40 years leasehold reform acts have experienced several revisions. Since their inception back in 1884 to the most recent review in 2002, leaseholder’s rights have enabled more people to extend leases and buy the freehold for their property. Our timeline outlines the changes to the leasehold reform act.

The Beginning: 1884-5

Initial discussions about acquiring the rights to the freehold first came about in 1884, when the Royal Commission on The Housing of the Working Classes questioned whether granting rights would improve quality of living for those in such properties. Despite the subject being debated it wasn’t until 1948 that the subject was officially recommended.

Leasehold Reform Act 1967

No actual legislation was passed following the recommendations in 1948 until the official Leasehold Reform Act 1967, 19 years later. The 1967 Act allowed homeowners with long leases to purchase the freehold, or acquire a 50 year lease extension. The introduction on the Act included numerous qualification criteria.

Landlord & Tenant Act 1987

Flat and maisonette owners were awarded more rights in the Landlord and Tenant Act 1987, after they were omitted completely from the Leasehold Reform Act in 1967. This revision established rights for flat owners to acquire the freehold for their building. Flat owners were also given the right for first refusal should the freeholder wish to sell the freehold on, this meant leaseholders could purchase against successful bids.

Leasehold Reform Housing & Urban Development Act 1993

Residential flat owners were the main winners from the 1993 Act, which saw a major change in legislation laws. The Act, which faced heavy opposition during discussions, introduced the right for flat owners to extend leases by 90 years on top of their existing unexpired lease at peppercorn ground rent – which essentially meant the rent for leases was nil. Some rules and restrictions were introduced alongside the new law, including a qualifying period and an agreement level of owners who wish to apply to buy the freehold.

Negotiating Lease Extensions in Private Agreement Negotiations

Posted on 07/08/13, filed under Lease Extension Advice, Lease extensions

Lease extensions can be obtained in two ways: via the provisions of the 1993 Leasehold Reform, Housing & Urban Development Act, or through agreeing terms informally with the freeholder. This will depend upon the willingness of a particular freeholder to be reasonable and whether the freeholder is keen to negotiate non statutory terms, such as a shorter lease extension or retained ground rent. However, some freeholders simply will not agree anything informally or will only agree unrealistic terms.

If terms can be agreed informally then the leaseholder could save costs and time. Also, by agreeing a shorter extension or ongoing ground rent the premium should be lower. It is still necessary to instruct a specialist lease extension valuer. They will be able to guide you on the cost of the lease extension and negotiate reasonable terms on your behalf.

Before Commencing Informal Lease Extension Negotiations

Before entering into any negotiations with the freeholder, determine what a reasonable premium is. Commission a valuation by a specialist lease extension valuation surveyor. The surveyor will advise upon the likely statutory costs and provide a clear indication on what would be reasonable for a shorter extension with a retained ground rent.

Approaching the Freeholder

With information and professional advice gathered, it’s time to approach the freeholder. How you go about this will depend entirely upon your relationship with the freeholder. Those entering into private agreement negotiations tend to have a friendly relationship, making the process much easier. If not, then it’s best for the valuation surveyor to make the initial approach to the freeholder, often a more reasonable response will be received if the freeholder realises that the leaseholder is represented.

Negotiating the Lease Extension

Remember – this is a negotiation. When you begin negotiations with the freeholder there’s no reason to offer the full premium. Try entering an offer below the surveyor or calculated-valued premium as a starting point. Chances are, if you’re on good terms, the freeholder will be open to offers.

Unfortunately many freeholders will not agree informal negotiations, in some cases requesting upfront payments simply to consider matters. In these circumstances it will then become necessary for matters to proceed formally via the Statutory Route with formal notice served on the freeholder.

Where possible you should always seek expert advice when beginning lease extension proceedings. Often experienced valuation surveyors will know whether a particular freeholder will be agreeable to informal negotiations prior to any work commencing – talk to the Sussex Lease Extensions team today for expert advice and help.