The government is proposing a range of changes to Leasehold and this includes how and what term a lease can be extended for. This is under the Leasehold and Freehold Bill.
At this stage, we don’t know how the changes will affect Leasehold but would recommend you read about the Leasehold and Freehold Bill before you proceed with any application.
What is a Lease Extension?
When you purchased your home, you’ll have a “lease term” for a defined number of years. Normally this would be from 99 years or 125 years up to 999 years.
A lease extension is a mechanism by which you can extend your original term. As long as we own the lease, we offer lease extensions of 90 years on top of the existing lease term. for the existing terms plus 90 years provided we are the freeholder.
For example, if your lease started on 1st April 1990 for 99 years, this would end in 2085. By ending your lease by 90 years this would add 90 years onto 2085 and your lease would come to an end in 2175.
We've created this handy information pack to give you a quick overview of Lease Exstentions. We've also got lots of frequently asked questions below.
FAQs on Lease Extensions
The term of your lease will reduce over the years. As the years left on your lease go down, so will the value of your home.
Generally, lenders are reluctant to lend where there is a term of less than 80 years left on a lease. This means if you have a term lower than that, you may struggle to sell in the future.
The amount you pay for a lease extension will depend on what the valuation of your home states. For information about what the cost of a valuation would be click here.
You can use the calculators available at the below website to get an idea of the premium if you own 100% of your home:
As well as paying the premium, you will also have to pay:
- Your solicitor
- The valuation (to calculate the premium)
- The legal costs of our solicitors
- Our administration fee
It’s difficult to give exact timeframes as the process to extend a lease includes other parties, such as solicitors to draft the necessary paperwork and any lenders involved.
It will also depend on the route taken to extend a lease. For example, if done under statute as opposed to the voluntary/informal route there are strict timeframes to be followed.
Normally it will take in the region of 3 to 6 months to complete, however this is subject to change.
The lease extension valuation is valid for 6 months. We appreciate this this may sound like a long period of time but it’s important to instruct solicitors as early as you can.
Leasehold transactions are often lengthy and both parties (your solicitor and our solicitor) will need to legally consult and reach an agreement.
There is no obligation on you to extend your lease, however the shorter the term, the less your home will be worth and the less attractive it may be to a potential buyer.
The term you can extend your lease by will depend on how the lease extension is done (i.e. voluntary or under statute).
If your home is still a shared ownership property, this will be taken into consideration and you will only pay for the lease extension on the shares of the property that you own.
The cost of buying shares in your home will depend on the current market value of your home.
We'll need a updated valuation of your home so that we can accurately cost the remaining shares. When we've got this cost, you can decide whether you want to proceed with buying more shares.
You can find out how much your valuation will be by seeing our Fee Schedule.
Extending a lease is a legal process and can be confusing. For this reason, we recommend you seek independent legal advice before and during the process. Not having legal representation could make the process longer and possibly more expensive.
Your solicitor will be able to let you know whether it’s better for you to go down the informal route or whether you have a legal right to go down the statutory route. They’ll also prepare legal documents, liaise with our solicitors and respond to our requests for information.
Your solicitor will also be your main point of call for questions and will be able to keep you updated through the process.
What's the process?
We’ve pulled together some information for each type of property to give you a better overview about the process of extending the lease and your next steps. If you have any questions, or we haven’t covered your particular situation, please give us a call on 0345 60 20 540.
We offer lease extensions through an informal route although you have the right to go down the statutory route should you choose.
If you wish to gain more information about a lease extension you can call 0345 60 20 540.
Follow the route under The Leasehold Reform, Housing and Urban Development Act 1993 ('the Act').
- Serve us with a Section 42 Notice. If you seek independent legal advice then a solicitor will be able to help you with this.
- Once we have received your Section 42 Notice, we will instruct a RICS Valuation of your home. This will calculate the premium payable for your lease extension. The cost of the valuation will be paid by you.
- The valuation will then set the premium to be paid by you for the lease extension.
- The premium to be paid will be agreed between the solicitors and they will proceed to draft the necessary papers.
- You will have an extended lease.
Lease extensions for Mutual Residents are completed on a voluntary basis, that is because there will need to be enough term in your landlord’s headlease for you to extend yours.
You can get more information about extending your lease by contacting our mutuals team at mutuals@midlandheart.org.uk .
Under The Leasehold Reform, Housing and Urban Development Act 1993 (‘the Act’), Shared Owners do not have a statutory right to extend your lease.
However, we will allow you to extend your lease, on similar terms as permitted by the Act. This would be subject to reasonable conditions.
You can start the process to extend your lease by:
- Inform us that you would like to extend your lease by calling 0345 60 20 540. A member of our specialist team will be able to help you.
- Pay for the valuation and administration fee. You can do this when you speak to a member of our team on 0345 60 20 540.
- A valuation of your home will take place which will determine the premium to be paid.
- Once the premium has been agreed if you wish to proceed you will need to instruct It can be a good idea to get a few quotes before deciding on one as some can charge a fixed rate and others by the hour.
- Both solicitors will liaise with each other, draft all the necessary paperwork
- Your lease will be extended.
If you wish to gain more information about a lease extension you can call 0345 60 20 540.
