What is a lease extension

A lease extensionis the legal process of increasing the years remaining on an existing lease (long term rental agreement) on a property you own or intend to buy.

By extending the lease, you preserve the property's value and maintain its marketability. 

When you own a leasehold property, you have the right to live in the property for a fixed period of time as specified in the lease agreement.

The primary reasons for extending a lease include:

• Maintaining Property Value: A leasehold property's value can drop significantly as the remaining term diminishes, particularly when the lease term falls below 80 years.
• Ease of sale or remortgaging: Properties with shorter leases are often less attractive to buyers and lenders. Extending the lease can make the property more appealing.
• Avoiding Additional Costs: The cost of extending it increases due to "marriage value", an additional cost that comes into play when your lease falls below 80 years.

The process of extending a lease typically involves the following steps:

1. Eligibility Check: To qualify for a lease extension, you must have owned the property for at least two years.
2. Valuation: You'll need to hire a qualified surveyor to determine the value of the premium (the difference in cost between the current value and long lease value).
3. Send a formal notice: Send to the freeholder a notice, called the section 42 notice, stating your intent to extend the lease.
4. Negotiation: You'll then have to negotiate the terms and costs with the freeholder. It can be a drawn out process.
5. Legal paperwork: Once the terms and costs are agreed, your solicitor will handle the legal formalities and finalise the new lease agreement.
6. Premium payment and registration: The last step will involve paying the premium and registering the new lease with the Land Registry.

The cost of a lease extension depends on factors like the property's value, the remaining lease term, ground rent, any improvements made on the property, and market conditions.

Our team at Homeward Legal is well-versed in the lease extension process. 

Call us on  to get your conveyancing quote started, or to discuss your concerns with your plans to extend the lease on your property.