The process of extending your lease can be complicated and lengthy. We go over the steps involved, the costs and the best way to seek assistance from an expert you can manage every aspect of the lease extension process and avoid common mistakes.
What is the cost for the cost of extending my lease?
It is possible to extend your lease for a fee that is contingent on the value of your property and the length of time remaining on the lease, the ground rental per year, the amount of the improvements made to the property, the amount paid by the leaseholder, and other external factors like the expected rates of return on investment. The lease extension cost is a complex process, however, it is also a subjective one that means it is subject to negotiation or a the decision of an arbitral.
In addition to the cost of purchasing the extra years in your lease (the cost of the lease) you will have to pay:
The cost of obtaining legally-based advice (your solicitor)
The lease extension’s appraisal document (a surveyor)
The freeholder’s legal and reasonable own appraisal costs (yes you are obliged in law to reimburse these)
Fees for Land Registry
The government is currently planning changes to the process for extending leases to make it more simple and more straightforward for you to renew your lease. However, it could take several years before they become legally binding.
Do I need legal assistance for extending my lease?
Yes! It’s tempting to engage in informal lease extension discussions together with your landlord. In the event of a formal agreement, you generally only pay the legal and valuation fees when you take the formal route means that you must pay your own and the cost of the freeholder. If ever the term “false economics” applies, it’s in this case! It is possible that you are saving money on legal costs , but you could end up paying more for lease extensions than you ought to and in the worst-case scenario, turn your house unsellable.
The primary issue is that in the extension of a lease in an informal manner,, the freeholder is able to alter the minor details of the lease to benefit themselves for instance, such as conserving the ground rental. If you opt for the official statutory option and pay your ground rent, it is reduced to zero. After June 30, 2022 your freeholder won’t be able to raise the ground rent through the extension of a lease informally. But, they are able to keep the current ground rent (including any planned rises) within your lease to cover the rest of the period. Another method is to allow you to extend to 99 years or 125 years in comparison to the lawful option, you’ll get your current lease and 90 years. There are numerous possibilities in the lease extension process to include “modernisations” that generally benefit the freeholder but not the leaseholder.
Being formal also offers you better protection should something happen to go wrong. If you’ve taken”the formal “statutory” leasehold option and there are disputes regarding costs or any other issues, you may bring your case to an arbitration tribunal. There are also limitations on time for the formal route to lease extension , so your freeholder won’t be dragging their feet.
Which are my options I need to take for the extension of my lease?
Step 1: Inform the freeholder that you would like for an extension of the lease, and that you are taking the legal procedure.
Step 2: appoint an attorney for lease extensions with an expertise in the field, and who is an active participant in the Association of Lease Extension Practitioners (ALEP). Request estimates and compare costs.
Step 3 – Locate an expert valuation surveyor in leasehold extension legislation as well as the local market for properties. Certain solicitors, such as our partnership company Bonallack and Bishop, can help you connect with surveyors they have confidence in.
Step 4 – Create an official offer. You must give notice to tenants and your lawyer will be assist you with this.
Step 5: Make the deposit payment if one is requested by your landlord. The amount will be PS250 or 10 percent of the rent cost in the tenant’s notice or if it exceeds PS250. If the landlord requires the deposit, it must be made within 14 calendar days, which is why it’s essential to have the cash readily available.
Step 6: Negotiate an amount. Your lawyer will help or handle this.
If the freeholder isn’t willing to accept the price you’ve suggested, you’ll have to bargain. If you are unable to reach an agreement then you’ll need make an application for the First Tier Tribunal (Property Chamber). Although cases that go to the tribunal are not very common but they can be time-consuming and expensive, which is why it is best to avoid this process if possible.
How do I know how long it will be to renew my lease?
The procedure of extending the lease usually takes between 3-to-12 months and can be accomplished faster by skilled valuers, solicitors and experts, so pick those who are reputable.
How can I reduce the cost of lease extensions low?
To reduce the expense of your lease extension:
Make sure you extend your lease as quickly as you can, especially prior to the 80-year mark, at which point it becomes more costly to extend the lease by buying more years
Hire a specialist solicitor to provide the correct legal guidance
You should hire a specialist surveyor to ensure you receive the correct valuation and don’t have to pay more than you should.
Changes in the leaseholder’s laws 2022
From the 30th of June 2022, the ground rent will be abolished on all leases that are new. This applies to all new properties and leases that were renewed (statutory or informal). The government has committed to another set of leasehold reforms in order to facilitate and make it more fair for you to renew your lease or purchase the freehold.
This could include:
A option for the extension of lease beyond the 990 year period. Leaseholders currently have the option of adding the additional 90 year lease by utilizing the legal process.
A loan extension calculator. By standardizing the price for a lease renewal leaseholders can save time and money on discussions.
eliminate wedding value. This is especially true for leases that have under 80 years.
But, these changes will not be implemented for a few years, at the very least. They also run the risk being diluted or modified in the future. It is not advisable to hold off trying to sell or might be in danger of getting a lease that is short. Talk to an expert on leaseholds for further guidance.
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