In residential property, lease extensions can be legally complex, but with the right professional support, the process can be simplified and managed effectively.
What are lease extensions?
Lease extensions occur when you extend a lease agreement between a leaseholder and a freeholder, usually for a residential property with a long lease.
To extend your lease, you may be able to do this by 90 years on a flat and 50 years on a house, if you qualify.
Leaseholders of flats have two options for extending their leases:
· You can follow the legal process if you satisfy specific requirements (formal route) or;
· You can approach the freeholder to explore the possibility of negotiating a lease extension informally (informal route).
To find out if you meet the criteria, you should consult a solicitor who will be able to advise you of the best path.
Why might a lease extension be necessary?
In the UK, extending the lease of a residential property may be needed for several reasons.
Extending a lease can help with mortgage eligibility as lenders require a minimum number of years remaining on a lease before they will approve a mortgage. Most lenders require at least 70 to 80 years left on the lease, but some may require even more.
Lease extensions can also be useful to help with property value. A short lease term can negatively impact the property’s value, as the leasehold interest diminishes over time.
Extending the lease can help maintain or increase the property’s value by providing a longer lease term, which makes the property of more interest to potential buyers and lenders.
If you are planning to stay long-term, a lease extension can provide you with greater security and peace of mind.
Before pursuing a lease extension, it’s essential to consult with a property lawyer to understand the process, the costs involved, and any potential implications.
Changing a lease
If you are looking to change a lease rather than to extend your lease, you will need to speak to the freeholder and agree a variation on the terms of the lease.
Typical reasons to change a lease include:
· Defining the extent of the property
· Altering service charges and ground rents
· Changing the duration of a lease
If you cannot come to an agreement; you will need to apply to a tribunal to vary the lease.
Be aware that the grounds for a compulsory lease variation via a tribunal are limited.
How can we help?
If you are feeling worried or confused by the law, we can help.
Our expert team will be able to advise on lease extension valuation, negotiation, legal documentation, and dispute resolution.
You should seek professional guidance to ensure your rights and property are protected.
If you need advice on lease extensions or other property related issues, contact us today.