Lease Extensions London
Lease Extension Surveyor
Property leases are a diminishing asset, losing their value as the remaining term decreases. While this may not affect the owner while they live in the property, it can result in a short supply of buyers when the time comes to sell up. Many house-hunters will factor the cost of extending a lease into their decision to purchase and it’s difficult to find lenders willing to finance a property with less than 70 years remaining.
Foundation Surveyors have many years experiences in this field. Our lease extension surveyors work across London, providing lease valuations and assisting with lease extensions for freeholders and leaseholders.
The Leasehold Reform, Housing and Urban Development Act (1993) gives owners of a leasehold property the right to extend the term of their lease by 90 years, and reduce their annual ground rent to zero in exchange for a premium, paid to the freeholder. For a quick estimate of how much a lease extension will cost for your property, try using our Lease Extension Calculator.
In almost every instance of a leasehold extension, a negotiation between parties over an appropriate premium is required, which is where the expertise of a qualified surveyor is required. It’s also recommended that you obtain a professional leasehold valuation for the property in question. If you would like to learn more about the leasehold extension process, you can read our dedicated guide below.
At Foundation Chartered Surveyors we work for tenants (leaseholders) wishing to apply for a leasehold extension and for landlords (freeholders) seeking assistance with a formal or informal counter-offer. We can also assist multiple leaseholders in the same building with collective enfranchisement.
Foundation Surveyors have an easy to use calculator designed to give you a good indication of the likely cost of your lease extension.
The price will depend on multiple variables, including the value of their flat, the length of the lease, the capitalisation rate, deferment rate, the ground rent and negotiation skill.
For your convenience we offer both Desktop Valuations and Full Inspection Valuations, no matter where you are in England, we can certainly help you.
Our prices are highly competitive. Please give us a call today so that we can help you with your Lease Extension.
Lease Extension Calculator
Using our Lease Extension Calculator
The first question most Leaseholders have on their mind is, “How much is my Lease Extension going to cost me?”
To easily answer this, we have created a handy Lease Extension Calculator so that you can obtain an early estimate of what it will cost to extend your lease. Simply fill out the pertinent information and our Lease Extension Calculator will go to work to give you a reliable estimate.
The lease extension calculator cannot make adjustments for Leaseholder’s improvements, non-standard lease terms, rising ground rents, landlord’s reasonable legal costs, valuation costs or any other factors that might influence the amount of premium that would be payable. We invite you to contact us to obtain an accurate valuation.
Your results and details will be emailed to our team.
What are the steps you need to take in a basic lease extension process?
Determining how much extending your lease will cost. This is where Foundation Surveyors comes in.
Foundation Surveyors can help you in determining the valuation by undertaking a series of desktop valuations and/or full inspection valuations. We offer customised, well-informed advice.
Foundation Surveyors report includes a valuation (low valuation) to go with the offer you make to your Freeholder. We will also provide a valuation (high valuation) that we assume the Freeholder will make as their counter-offer. We will finally provide a valuation of the likely settlement premium.
Give our easy Lease Extension Calculator a try to get an indication of what the cost of your lease extension might be.
Making An Offer
There are two ways in which you can make an offer:
Formally: You hire a solicitor to serve a Section 42 Notice of Claim, which claims your right to extend your lease by 90 years at a ground rent of “a peppercorn.” It further states your proposed premium. Your Freeholder is now legally obligated to respond via a Counter Notice within 2 months from the date of the initial Notice.
Informally: This is done through correspondence in writing. Outside the stipulations of the relevant Act, you as the Leaseholder and your Freeholder can come to a mutual agreement. You can then make an offer in writing on the terms of a statutory lease extension. For example, a 90 year extension where the ground rent is reduced to “a peppercorn”. Or you may propose any other terms you like. When you enter into these types of negotiations, it is important to seek professional advice to ensure your position is protected.
After receiving a counter-offer, either through a Counter Notice or by way of correspondence, negotiations begin.
A statutory lease extension valuation is subject to several variables, which makes it subject to negotiation, which begin with the Leaseholder making an offer (low level) to the Freeholder. The Freeholder then comes back with a counter-offer (high level). The two parties then negotiate until they reach an agreement.
Premium Agreed On & Lease Extended
Once the two parties have agreed on a premium, the solicitors representing the Leaseholder and the Freeholder, will grant the new extended lease.
Non-agreement of Premium
If your Freeholder is uncooperative, or the you cannot reach an agreement, the matter may qualify for a hearing at the First Tier Tribunal, in which case we can represent you as an expert witness.
Get in touch with our team today...
Leasehold Extension FAQs
How is the lease extension premium calculated?
The premium is comprised of three parts; payment for the freeholders’ lost income from ground rent, compensation for their inability to resume possession of the property for an additional 90 years, and the ‘marriage value’ if the lease has fallen below 80 years.
‘Marriage value’ is 50% of the increase in property value granted by the longer lease, which, depending on how short the lease has become, can be a substantial amount. For this reason, it’s always advised that you extend a lease as soon as possible, and always well before the 80-year cut-off point.
Why do I need a surveyor to assist with a lease extension?
Lease extension is a complex process and a significant investment for most homeowners. Without a Chartered Surveyor with experience in lease extension valuations, you may find yourself paying an excessive premium or caught in a stalemate with your landlord. At Foundation Chartered Surveyors, we have extensive experience with a wide range of leasehold property, and can negotiate the fairest settlement between landlords and tenants.
Can anyone apply for a leasehold extension?
The 1993 legislation only covers those who have owned the property for at least two years (or are completing the process started by an eligible former owner), and in possession of a long lease – usually 21 years minimum from when it was originally granted. However, those that are not yet eligible may approach their freeholder for an informal agreement.
What will the Price payable be for extending my lease?
The price payable for extending your lease is dependant on a number of variables; some of these include the property’s market value, ground rent, deferment rate, capitalisation rate and the unexpired term of the lease (the premium payable is significantly higher when your lease has fewer than 80 years remaining).
It is important that Leaseholders retain qualified professional Valier’s like Foundation Surveyors who have expertise in this area of the law to offer sound advice on a price prior to serving the Initial Notice. The reason for this is that by law, the price stipulated in the Initial Notice has to be “realistic,” therefore; expert advice must be sought at the outset.
What if I am unable to locate the Freeholder?
If you have made every effort to locate your Freeholder and haven’t succeeded, your solicitor can file an application to the county court requesting a Vesting Order. It is up to you to prove that you made every effort to track your Freeholder down. Once you have proven to the court that you tried your best, you will then be allowed to go to a First Tier Tribunal to obtain your lease extension.
What am I obligated for in terms of Legal and Valuation fees?
You are responsible for paying your own legal and valuation fees, as well as the reasonable Freeholder’s valuation and legal fees. However, you are not obligated for the Freeholder’s legal fees for dealing with the court, negotiating the price or applications to the First Tier Tribunal.
Section 42 Notice FAQs
What is a Section 42 Notice?
Leasehold owners who have owned their property for a minimum of 2 years can seek an extension to the terms of their lease. There are two options: making a private agreement with the freeholder, or serving a Section 42 Notice under the Leasehold Reform, Housing and Urban Development Act 1993. The latter opens a predefined legal procedure for the landlord to grant a lease extension of 90 years and reduce ground rents to zero.
What can I do when no Counter Notice has been served?
You must specify a date for response of a minimum of 2 months from the date of serving the Notice for the freeholder to respond. If there is no response, you can apply to the County Court for a lease extension on the terms given in your Notice within 6 months from when the Counter Notice was meant to be given. It’s best to get professional help from an experienced lease extension surveyor such as Foundation Surveyors.
I have received a Section 42 Notice from one of my leaseholders. What does this mean?
A Section 42 Notice is the start of the formal procedure for a leaseholder wishing to extend their lease. If you have received this Notice, you should instruct a solicitor and surveyor, since certain statutory time limits will apply. You have 2 months within which to respond by accepting the terms, rejecting the terms, or making a Counter Offer. You are also entitled to request a 10% deposit based on the premium stated in the Section 42 Notice.
What happens when leaseholder and freeholder cannot reach agreement?
If no agreement regarding the lease extension according to the Act is reached, either party is entitled to apply to the Leasehold Valuation Tribunal for resolution. It can take 4-6 months for a tribunal hearing to be scheduled. Please note that timescales are strict. If the freeholder has served a Counter Notice within 2 months of the Initial Notice, the leaseholder must make a tribunal application no later than 6 months after the Counter Notice was served.