As a landlord, you may have various leasehold properties that are held under long leases. As the term of those leases gets lower, the leaseholder may ask for the term to be extended. On average, leasehold owners may start making enquiries when the lease of the property has a term which is 80 years or less.
A lease extension involves making the term of an existing lease longer.
Why does a leaseholder want to extend the lease?
A leaseholder would be interested in extending the term of the lease because:
- Protecting property value – a shorted lease term can cause the value of a property to decline. By extending the lease, a leaseholder can ensure the property retains its market appeal and value, making it more attractive to potential buyers or lenders.
- Security and peace of mind – lease extensions provide security, granting leaseholders peace of mind by allowing them to remain in their homes and retain ownership for a longer period.
- Marketability – properties with an extended lease term are generally more marketable than those with a short term.
- Lower ground rent – in some cases, a lease extension can include revised ground rent terms, reducing the financial burden on the leaseholder.
The lease extension process
The lease extension process involving landlords and leaseholders can vary depending on the route taken:
- You can enter into negotiations with the leaseholders. If you both agree on terms for the new lease and any premium payable then you will both need to appoint your own solicitor who will draft the necessary documents to reflect the new lease agreement.
- If you cannot agree on the terms, or the premium payable, the leaseholder may be eligible to extend the lease via a statutory route under the Leasehold Reform, Housing and Urban Development Act 1993. The leaseholder will need to establish they qualify for the lease extension and a qualified surveyor will need to be appointed to carry out a leasehold valuation. If the leaseholder pursues the statutory route, you will each need to appoint your own solicitor to ensure that the necessary notices are served and responded to in the necessary timeframes.
Conclusion
Lease extensions provide leasehold property owners with an invaluable opportunity to protect their investment, secure their homes and maintain their property’s value. By seeking professional advice you will understand the process and navigate the complexities involved and ensure a smooth transition to an extended lease term.
How can we help?
If you have any queries concerning the subjects discussed in this article, please contact a member of our expert Residential Conveyancing team in Derby, Leicester, or Nottingham to discuss your circumstances. Please call 0800 024 1976 or contact us via our online form.
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