Leaseholders in Parkinson Drive, Rookes Crescent, Evelyn Place and Crompton Street in Chelmsford have been contacting Holmes & Hills lease extension solicitors in order to extend their flat’s lease. Holmes & Hills are able to offer free initial advice regarding extending the lease on your flat. These properties were predominantly built in 2001-2004, meaning that their leases, originally 99 years in length, are nearing the 80 year mark which is when the cost of lease extensions will climb.
By extending your lease, you are helping to safeguard the future value of your residential property. The value of a leasehold property decreases as the lease gets shorter, and it can also be more difficult to re-mortgage a property with a short lease.
When a lease falls below 80 years, it becomes significantly more expensive to extend. This is because under the 1993 Leasehold Reform Act, if a lease is renewed with less than 80 years remaining, the leaseholder must compensate the freeholder by paying an additional fee called a ‘marriage fee’, which is equal to 50% of the increase in value derived from the lease being extended.
For example, if the value of a property increases by £20,000 due to the lease being extended (where the lease has less than 80 years remaining), the leaseholder must pay 50% of that increased value (i.e. £10,000) to the freeholder, in addition to other costs. If you extend your lease before it hits the 80 year mark, you could be saving a substantial amount of money.
There are two options when it comes to extending a lease; a statutory lease extension under the 1993 Act or by private treaty, otherwise known as an informal lease extension. In each case, it is recommended that expert valuation advice is sought (i.e. from a surveyor) to ensure that the price paid to extend the lease is appropriate.
An informal lease extension can be done at any point, so you would not have to wait to own the property for two years and the lease can be extended for any length of time – potentially up to 999 years - subject to the agreement of the freeholder. However, the process for an informal lease extension can take longer than a statutory lease extension – this is because there is no time limit that the parties are required to adhere to.
In contrast, a statutory lease extension follows a set process under the Leasehold Reform Housing and Urban Development Act 1993 to add an additional 90 years to the length of the existing lease. This means that a lease with an unexpired term of 65 years will, once statutorily extended, become a 155 year lease. The statutory process starts with the solicitor serving a formal notice (called a Section 42 notice) on the freeholder – this gives prescribed information but also proposed terms of the new lease (including the price/premium the leaseholder is willing to pay). The Landlord has a prescribed period to serve a formal counter-notice.
It is important to enlist a specialist lawyer to extend your lease, as they can best advise you on your right to extend a lease, the best approach to take in terms of dealing with the freeholder and can provide accurate estimates of costs and timescales. Holmes & Hills Solicitors’ lease extension specialists can save you money and time by preparing all the information and documents required for the lease extension application. We can also advise on selling or purchasing a property with a short lease.
If you wish to extend your lease before additional costs incur, or for free initial advice, please contact our specialist lease extension lawyer Callie Tuplin, on 01376 320456.