If you own a leasehold flat, you may be wondering about the process of extending your lease. A leasehold property is one where the property owner only has ownership rights for a set period, usually between 99 and 125 years. Once this period comes to an end, ownership of the property reverts back to the freeholder. This can cause problems for leaseholders who want to sell their property or remortgage it, as a short lease can make the property less attractive to potential buyers or lenders.
Fortunately, there are two routes to extend your lease – the statutory route and the voluntary route. We’ll take a closer look at each of these routes and the differences between them.
The Statutory Route
The statutory route to extending your lease is governed by the Leasehold Reform, Housing, and Urban Development Act 1993. This route gives leaseholders the right to extend their lease by 90 years, as well as reducing the ground rent to a nominal amount. To qualify for the statutory route, you must have owned the property for at least two years.
The process for extending your lease under the statutory route involves serving a formal notice on the freeholder. This notice sets out the terms of the proposed lease extension and gives the freeholder a fixed period of time (usually two months) to respond with a counter-notice. The two parties then have a period of six months to negotiate the terms of the new lease. If no agreement can be reached during this period, either party can apply to the First-tier Tribunal (Property Chamber) to determine the terms of the new lease.
The Voluntary or Informal Route
The voluntary route to extending your lease is not governed by any specific legislation. This means that the terms of the new lease are negotiated between the leaseholder and the freeholder. The voluntary route can be quicker and less formal than the statutory route, and the terms of the new lease can be more flexible. However, the freeholder is not required to agree to the lease extension and may be less willing to negotiate on the terms.
Which Route Should You Choose?
Deciding which route to take will depend on your individual circumstances. The statutory route may be preferable if you want to be sure of a fixed outcome and want to limit the risk of disputes. However, the statutory route can be more expensive and time-consuming than the voluntary route.
The voluntary route may be preferable if you want more flexibility in the terms of the new lease and are willing to negotiate with the freeholder. However, there is no guarantee that the freeholder will agree to the lease extension, and there may be more uncertainty and risk involved.
Whichever route you choose, it is important to seek professional advice from a solicitor or surveyor who specialises in lease extensions. They can guide you through the process and ensure that you are getting the best possible terms for your new lease.
If you are a leaseholder looking to extend your lease, you have two options available to you – the statutory route and the voluntary route. Each route has its pros and cons, and the best option for you will depend on your individual circumstances. Whatever route you choose, it is important to seek professional advice to ensure that you get the best possible outcome.
If you would like any further advice on funding lease extensions this may be possible through your mortgage, so please get in touch.