Please Note: This Article is 9 years old. This increases the likelihood that some or all of it's content is now outdated.

Lease Extension – I bought my flat 18 months ago and it is now rented out to my tenants. When I bought the Flat it had 73 years remaining on the lease but I have been told I should extend it as otherwise I might have a problem when I come to sell.

With leasehold you own the property for a fixed period of time, usually starting at 99 or 125 years. As the lease gets shorter it becomes more expensive to extend and mortgages are harder to get, so it usually makes selling difficult.

Taken to the extreme, if you never extend and the lease comes to an end, the freeholder would have no obligation to negotiate; you would become an assured tenant and no longer an owner.

You can ask your landlord to extend the lease at any time, negotiate terms like the cost, the length of the new lease, any variation in lease terms and the ground rent etc.

Cost is obviously your biggest concern. A proper valuation should take into account three elements:

(1) to compensate your landlord for loss of ground rent during the rest of the term,

(2) to compensate your landlord for not getting possession at the end of the term, and

(3) when the lease has less than 80 years left, there’s what’s known as a “marriage value”. This is arrived at by a complicated formula valuing the property before and after the extension, deducting one from the other, and taking into account the value of the landlord’s interest.

If a settlement cannot be agreed, leaseholders who have owned for 2 years (with a few minor exceptions) have statutory rights provided by the 1993 Leasehold Reform Act (as amended) for the grant of a new lease for a term of 90 years, plus the present unexpired term, all at a peppercorn rent (i.e., rent free).

If you cannot agree the terms between you, you may have to go to the Leasehold Valuation Tribunal (LVT) for a determination. The leaseholder will usually be liable for both parties’ legal and valuation costs, unless this goes to the LVT – they can rule on the apportionment of costs.

The process can be expensive, but in the long term it’s usually worth it as you are adding value to your property, you may be able to amend any lease terms you are unhappy with and you will no longer need to pay ground rent.

If you are contemplating such a move you should seek professional advice.

By Tom Entwistle,

LandlordZONE® ID2059

If you have any questions about any of the issues here, post you question to the LandlordZONE® Forums – these are the busiest Rental Property Forums in the UK – you will have an answer in no time at all.

©LandlordZONE All Rights Reserved – never rely totally on these general guidelines which apply primarily to England and Wales. They are not definitive statements of the law. Before taking action or not, always do your own research and/or seek professional advice with the full facts of your case and all documents to hand.

Please Note: This Article is 9 years old. This increases the likelihood that some or all of it's content is now outdated.


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