Our valuers specialise in residential lease extension We act on behalf of landlord or tenants advising on options available to each party.
Acting for either the leaseholder or the freeholder, we specialise in the valuation and negotiation required for residential lease extensions. We operate throughout London, Buckinghamshire, Berkshire, Surrey, Hampshire, Oxfordshire and Hertfordshire.
The Leasehold Reform, Housing and Urban Development Act 1993 gives the leaseholder – also known as the tenant or lessee – the right to extend their lease by a further 90 years, without a ground rent. The freeholder is legally obligated to comply with this request, depending on three criteria:
It is especially important for leaseholders to act upon extending their lease when the unexpired lease term is approaching 80 years as this is when the costs involved begin to escalate.
You can extend your lease at any timeView More
Extending your lease can be a complex process, so ensuring you have the right legal and valuation advice is imperative. To help you gain a better understanding of the process, we’ve answered some of the most common questions below.
A lease extension gives the leaseholder (also known as the ‘tenant’ or ‘lessee’) the right to extend their flat’s least by a further 90 years.
This is enabled by the Leasehold Reform, Housing and Urban Development Act 1993, and the Commonhold and Leasehold Reform Act 2002. The freeholder (also known as the ‘landlord’) is legally obligated to comply with this request.
The leaseholder must have owned the property for at least 2 years, and the lease must have an original term of at least 21 years. You do not need to have lived in the flat at any time.
Yes. The fewer the number of years remaining on the flat’s lease, the less valuable it becomes. With a reduced value, it will be harder to secure a mortgage and the flat will become more difficult to sell.
Most lenders require at least 70 years remaining on the lease, with some requiring as much as 85 years. If the lease is below this figure, you are restricting the market to cash buyers without a mortgage, and they will likely require a discount from your expectations. The longer you put off extending your lease, the flat will become less valuable, increasingly difficult to sell, and the cost of a lease extension will increase.
Put simply, there is no better time than now. The process only becomes more expensive as the lease shortens. One important milestone is when the lease falls below 80 years. Once this occurs, the cost to extend your lease now includes the addition of a ‘Marriage Value’, which increases the premium substantially. Marriage value is the amount of extra value a lease extension would add to your property. Therefore, all leaseholders should be wary of this event and ensure action is taken well in advance.
Your lease will be extended by 90 years, in addition to the remaining term. For example, if you have 70 years left on your lease, you will be given a new lease of 160 years.
The price depends on several variables, such as the value of the flat, the ground rent payments, and the length of the current lease. You will need a Chartered Surveyor to carry out a valuation of your property and determine the likely extension premium. The final sum is then negotiated between the leaseholder and the freeholder. Other costs to consider include legal fees, valuation fees, stamp duty, and the freeholder’s fees.
The most common way of covering the costs is to extend your mortgage. Most lenders will be happy to do this if you have sufficient equity, as it increases the value of their security.
A Section 42 Notice is the formal notice which triggers the statutory lease extension process. This is sent by your solicitor to your freeholder. This Notice should be served with proof of delivery, so the serving of the Notice cannot be disputed.
On average, the process could take between six to twelve months. If an informal agreement can be made with cooperation from the freeholder, this time can be reduced.
Extending your lease can be a complex process, so ensuring you have the right legal and valuation advice is imperative.Below we’ve included answers to some of the most common questions, to help give you a better understanding.
The leaseholder should initiate negotiations with the freeholder once their surveyor has valued the property and calculated the likely premium. This can be done informally to start – however if no progress is made, then the leaseholder can issue a Section 42 Notice. The freeholder then responds with a Counter Notice which will include their counter premium proposal. This must be served within 2 months of the date of the Section 42 Notice. Negotiations will then begin between the surveyors of the two parties. If the surveyors of the two parties are unable to agree on a premium, then either party can apply to the First-tier Tribunal to have the matter settled by an independent body. This can be done within 6 months from when the freeholder’s Counter Notice was due.
A lease extension can be challenged. However, if an agreement of terms is not finalised by the surveyors of both parties, the issue can be taken to a First-tier Tribunal to have the matter settled by an independent body.
If the leaseholder begins the formal statutory lease extension process by issuing a Section 42 Notice, then they are responsible for costs incurred by the freeholder during the claims process. This will include: • The freeholder’s valuation of the property • The legal costs of drawing up a new lease • Any costs from the original claim of the lease extension. • The premium payable to extend a leasehold The leaseholder will not pay for any legal costs for negotiating the price. If the leaseholder and the freeholder enter informal negotiations regarding a leasehold extension, each party is liable for their own individual costs incurred, but the payment of the freeholder’s costs may form part of these negotiations. If the surveyors of the two parties cannot agree on a premium and the claim is taken to a First-tier Tribunal, each party will be liable for their own costs.
If a leaseholder enters statutory proceedings the freeholder does not have the right to charge a fee, as the leaseholder has a legal right to extend their leasehold. However, leaseholders are obliged to pay the landlord a premium for the lease extension – which will be determined by specialist surveyors of both parties – as well as paying any reasonable costs incurred by the freeholder.
If the leaseholder and freeholder initiate negotiations, the freeholder can put forward their own lease terms before the Section 42 Notice has been issued. This may include charging the leaseholder fees for requesting a lease extension. However, the freeholder is under no obligation to enter informal negotiations and may offer a new lease on different terms – for example, a lease term of less than the 90-year extension provided by statute or at an increased ground rent. If terms cannot be agreed on through informal negotiations, the leaseholder does not have recourse to the First-tier Tribunal and must therefore commence the formal statutory process.
Once the Section 42 Notice has been served, the freeholder has the right to request evidence of the leaseholder’s title to the flat and their period of ownership. If this is not supplied by the leaseholder within 21 days then the Notice of Claim can be withdrawn, and the leaseholder must pay any “reasonable” costs and valuation fees incurred by the freeholder. Freeholders can appoint their own specialist chartered surveyor to inspect the leaseholder’s flat for valuation and calculate the likely premium. At this stage, the freeholder requests a 10% deposit of the initial offer price set out in the Notice of Claim from the leaseholder, payable to the freeholder within 14 days of the request being made. Even after an application for a lease extension has been submitted, the freeholder still maintains the right to sell their freehold. This will subject the new purchaser to any existing applications for a lease extension, if they have registered their Notice of Claim with the Land Registry. This means any application for a lease extension will continue as though the new owner had originally received the Section 42 Notice. If a freeholder owns a property with a lease of less than 5 years from the service date of the notice, then they can claim the right of redevelopment against the leaseholder’s request for an extension. In this circumstance, the landlord has to prove indefinitely that he intends to demolish and redevelop the building, therefore voiding the leaseholder’s extension claim. In addition to this, the landlord has the right to repossess the flat for purposes of redevelopment, once the existing lease has reached the end of its term. This right is subject to an application to the courts as well as compensating the existing leaseholder for the full value of the 90 years that remains on the lease.
Under the Leasehold Reform Housing & Urban Development Act 1993 and the Commonhold & Leasehold Reform Act, a leaseholder legally qualifies to extend their lease, provided the below qualifications are met: The property is a flat The leaseholder has owned the property for at least 2 years The lease has an original term of at least 21 years As long as the leaseholder requesting a leasehold extension meets the above criteria, they have the legal right to proceed with initiating negotiations.
If the leaseholder and freeholder initiate negotiations, before issuing the Section 42 Notice, the freeholder can put forward their own lease terms, which may include charging the leaseholder fees for requesting a lease extension. The landlord is however under no obligation to enter into informal negotiations and may offer a new lease on different terms; such as a lease term of less than the 90 year extension provided by statute or at an increased ground rent. The landlord is under no obligation to enter into informal negotiations and if terms cannot be agreed on this basis the leaseholder does not have recourse to the Tribunal and must therefore commence the formal statutory process.
We have experienced RICS registered valuers specialising in valuation for lease extensions who operate throughout London, Buckinghamshire, Berkshire, Surrey, Hampshire, Oxfordshire and Hertfordshire. We can also act nationwide as required. Our recognised and recommended regional firm has a multi-disciplined team that takes pride in its work and in delivering the highest standard of service by building strong working partnerships based on trust, efficiency and excellent communication.
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BSc (Hons) MRICSHead of General Practice
BSc (Hons) MRICSHead of General Practice
Nathan joined Kempton Carr Croft as a Graduate Surveyor in 2007 with a degree in Property Development from Portsmouth University.
After completing his APC with the firm he qualified as a Chartered Surveyor and RICS Registered Valuer in 2010.
Now as Head of General Practice, he leads the provision of Residential Lease Extension and Leasehold Enfranchisement work, private valuation work, Landlord & Tenant matters including Lease Renewals, Rent Reviews and Commercial Agency. He works closely with a number of large private clients, public bodies and property development companies with substantial portfolios to conduct professional work throughout the Thames Valley, West London and Chilterns.
Nathan is Head of our General Practice team.
Contact Nathan for:
T: 01628 582713 M: 07843 663993
MRICSChartered Surveyor & RICS Registered Valuer
MRICSChartered Surveyor & RICS Registered Valuer
Paula joined us in June 2016 and brings over 20 years’ experience in surveying roles. She studied Valuation & Estate Management at Bristol Polytechnic and became a certified member of the Royal Institution of Chartered Surveyors (RICS) in January 2001.
Paula works in our General Practice team.
Contact Paula for:
M: 07557 505760