Can a residential lease be extended?
It is estimated that there are almost 4.9 million leasehold properties in England. Many people are put off from buying a leasehold home because of the length of time remaining on the lease, and they presume that extending it will be costly and/or difficult.
In this blog, we look at what happens when a lease is due to expire and if you can extend it.
What is a leasehold?
When you buy a leasehold, you are buying the right to use the property and land detailed in the lease for a fixed number of years. This is typically between 99 and 999 years, which seems like a long time, but if the lease is old, this could soon run out.
The lease is agreed upon and managed by the owner of the freehold; this is typically an individual or a property management company.
You will need to check the terms of the lease if you wish to make any adjustments to the leasehold property, e.g. building an extension or even changing the windows, as you may need to ask permission from the freeholder first.
Leaseholds are most common in flats; however, property developers are increasingly selling new build homes under long leases.
What do I need to consider when buying a leasehold?
When buying a leasehold property, it’s important to consider the number of years left on the lease, as the less time there is left, the more expensive it will be to extend.
It is also worth considering that, the less time remaining on the lease, the less valuable the property may be should you wish to sell it in the future.
As a general rule of thumb, if your lease is under 80 years or is approaching 80 years, you may wish to consider seeking legal advice on a lease extension as soon as possible. As the law currently stands, a landlord is entitled to ask for an additional sum representing ‘marriage value’ if the lease has less than 80 years left to run. However, this is due to change once recent legislation is fully implemented.
How long can I extend the lease by?
Under the Leasehold Reform, Housing and Urban Development Act 1993 (which was updated in May 2024), owners of houses and flats may be legally entitled to extend their lease by 990 years once the updated legislation is fully in force. At present it is 50 years and 90 years respectively, as long as they have owned the property for more than two years.
If you own a leasehold house, the process for extending your lease differs; leases for houses can only be extended for 50 years.
How do I find the freeholder?
You should be able to find details of the landlord or freehold owner of your property at the Land Registry or within your conveyancing documents, but if you do not have these, or your property is not registered, your solicitor can help track them down.
How to extend a residential lease
The right to extend the lease of a flat falls under the Leasehold Reform Housing and Urban Development Act 1993. Currently, once a leaseholder has owned the property for more than two years, they are given the right to extend the lease for an extra 90 years on statutory terms as detailed within the Act. For example, if there were 80 years left on the lease, the new extended lease would be for 170 years.
You do not qualify as a leaseholder if either the landlord/freeholder is a charitable housing trust and your property is provided as part of the charity, or if the property lease is used for business or commercial use.
If you want to extend your lease, you should seek legal advice as soon as possible. The process for extending a residential lease usually goes as follows:
- Instruct a solicitor who specialises in leasehold conveyancing. Extending a lease can be complex, so having a professional at your side to make sure the process runs smoothly can make a world of difference.
- Value the lease: your solicitor can advise you on obtaining a lease extension valuation (they will usually use or recommend an external expert). This valuation will provide an accurate figure which you will need to pay your landlord/the freehold owner of the property.
- Once you have your valuation, your solicitor can begin to draft the formal notice which would need to be served upon the freehold owner of your property. Once a formal notice is served, the statutory process for a lease extension has begun and your landlord will have a period within which they are required to serve a counter notice.
If terms are agreed by the parties, the lease can then be drafted and finalised.
As a leaseholder, you would be required to pay for the landlord’s costs of dealing with the lease extension, in addition to your own.
Disputing a residential lease with a landlord
If you are eligible to extend a lease but are unable to agree to an extension with the freeholder, you can take it to a Tribunal. It is vital to instruct a solicitor at this point if you haven’t already done so.
Changes to the process for leasehold extensions
The Leasehold and Freehold Bill currently being considered by the House of Lords proposes significant reforms in this area.
Early indications suggest that the process could make it cheaper and easier for leaseholders to extend their lease. You should discuss the proposed changes with your solicitor to see what effect it may have on your right to extend our lease.
Get in touch with our property solicitors
If you wish to extend your long residential lease, our property litigation solicitors are here to help.
For more information, call us on 0117 325 2929 or fill out our online enquiry form.