As many leaseholders are in the dark when it comes to an extension, this article contains some answers to frequently asked questions.
Q. What does "extending a lease" actually mean?
A. If you live in a leasehold property, then your lease will have granted you the right to live there for a fixed period of time. This is the applicable terms which is normally 99 to 125 years. The actual building remains the property of the landlord, and, in theory, full ownership will revert back to them once the lease term has expired. English law grants most leaseholders the right to add an extra 90 years to their lease, in addition to any remaining years on their current lease term - these increases are known as leasehold extensions.
Q. What positives are there for getting a lease extension?
A. Primarily financial. If you've bought a leasehold property, then you have a reasonable expectation of enjoying the results of that investment. A short lease can seriously jeopardise this, because it undermines the value and saleability of the property. Buyers and mortgage companies are both very reluctant to take on properties where the lease term is coming to an end. Also, you're obviously more secure in a property with a long lease, since there's less prospect of the building reverting back to the landlord - if that happened whilst you were still living there, you'd be a tenant in your own home!
Q. I've heard that it's important to extend a lease before the term falls below 80 years. Why is this?
A. If your current lease term falls below 80 years, then you become liable for something known as the "marriage value". This is a lump sum based on an increase in the property's value once the lease has been extended. You have to pay this up front to the landlord should you apply for an extension. In practical terms, it makes the whole business of leasehold extensions much more expensive.
Q. I live in a leasehold house - can I apply for a lease extension too?
A. Yes. The law grants a general right to extend a lease to all types of residential leasehold properties, provided the lease was granted for more than 21 years in the first place. You must have actually owned your lease for 2 years even though you need not actually have lived in the property for that period. For house owners, there's the additional requirement that the lease can't have already been extended in the past. You should also bear in mind that this is a general right. As exceptions will sometimes apply, double check with your lawyer.
Q. Do I need to engage the services of a professional?
A. Absolutely! Extending a lease is something that is best done with the help of a specialist solicitor, who will be able to handle all the paperwork and serve the correct notices on your behalf. You'll also need to work with a valuer or surveyor, who'll be able to calculate the exact cost of the extension. With the right professional help, extending a lease is much easier, and the benefits will far outweigh any costs involved.