Hi, my name is Paul Fletcher from Lancaster in the north of England. Over the last year (2017-18) I went through the process of lease extension on my flat, when I began researching the procedure, I couldn't find a simple no-frills 'How-To' guide for the process of extending the lease, so I decided to write one.
You'll find the leasehold system of property ownership to be archaic, unwieldy and a money-go-round for the various solicitors, valuers and freeholders who do very nicely out of the system. Interestingly, leasehold flat ownership is almost only found in the UK and some far-flung former colonies such as Ghana. Places like the USA, France and Australia have the superior Condominium (Condo) style of collective property ownership, where you own your flat and a share in the building in-perpetuity (forever).
With leasehold, what you actually own is a piece of paper giving you effective ownership of the property for a set period of time, i.e. the remaining term on the lease. The lease can be extended, but a leaseholder should be fully aware of how long his lease has to run and what the implications are for owning, buying and selling his property: that is what I have tried to cover on this website.
This guide was written for leasehold flat owners in England and Wales, although the general principles would apply to leasehold house or flat owners UK-wide.
My flat had 85 years remaining on the lease, I chose to extend the lease for a further 90 Years (i.e. to 175 years) which cost me £5,200 and took about 8 months from start to finish. My situation was that I needed to sell the property, and I wanted a long lease to give potential buyers peace of mind (and also to give me the full market value of my flat). Having 85 years remaining on a lease sounds like a lot, however I'd suggest that once a lease reaches the 95 year (remaining) mark, there starts to be an effect - albeit marginal at first - on the resale value of the property. When I sold the flat this year, the new longer lease added around £7k to the value of the property and probably helped me get a quicker sale. See How to Extend your lease for more on the issues involved in extending.
I would sum up the significant lease extension milestones as follows:
- If you have 100+ years remaining on your lease, you don't need to extend and I wouldn't worry about it at this stage;
- If you have less than 95 years remaining on your lease and are planning to sell the property, think about extending as a means of pushing up the market value.
- If you have 80-85 years remaining, you need to take action now to avoid Marriage Fees (an extra fee payable when you extend).
- If you have less than 70 years remaining, potential buyers will have difficulty getting a mortgage on your property. You need to extend. It will be expensive.
There is a more detailed discussion of how the remaining term on your lease affects your property on the Buying a Leasehold Property page, the analysis is complicated somewhat by the fact that a new buyer cannot extend his lease within the first 2 years of ownership.
Your Leasehold options
Pretty much every leaseholder has the right to extend their lease under the 1993 Leasehold Reform Act and if you have <100 years remaining on your lease you should consider it. The process itself is straightforward enough, although you will need to engage a solicitor and (probably) an independent valuer/surveyor. Extending your lease will take time (months) and cost money (£thousands), you are effectively 'buying' the extension off the Landlord for a negotiated fee, plus solicitors + valuation costs. However in most cases an extended lease will add value to your property - usually more than the cost of the extension - so you should think of it as an investment. See How to Extend your lease for more information.
It's not possible for an individual flat owner to buy the lease back from the Landlord - extending the lease is the only option available to you as an individual. There are however some alternatives to the standard lease extension that are available to tenants acting collectively, such as the right to jointly purchase the freehold and extend the lease to 999 years for £1; these alternatives are not for the faint-hearted, but you should be aware of the range of options available to you as a leaseholder.
There is a lot of confusion and unwarranted fears about purchasing leasehold property, people naturally want the security of freehold where you have outright ownership the property, the land and everything that goes with it. The fear with buying leasehold is that you are answerable to some faceless, uncaring landlord, and that somehow leases are 'insecure'. These fears are unfounded; the reality is that a number of pieces of legislation, passed between 1967 and 2002 have significantly re-balanced the relationship between Landlord (Freeholder) and Tenant (Leaseholder). I'm not saying that things are perfect, but there has never been a better time to buy and own a leasehold property.
I have divided the lease extension process into a number of logical steps on the Main Menu (see above left). I would advise you to read through the entire process before starting down this road; if you are unsure where to start, try: How we got here, which explains how the current leasehold system came into being.
I use the terms Tenant and Leaseholder interchangeably on this website - they are the same in the eyes of the Law also. I have also assumed that your Freeholder and Landlord are the same person (again the terms are used interchangeably here) and that that person has granted you your lease. In real life things may be more complicated; quite often there are Intermediate or Head Leases involved, however I wanted this website to cater for the layperson or someone coming in 'cold' - so I've used the simplified relationship.
England & Wales, Scotland, NI
This website, and my experience, is with the leasehold system in England and Wales, property law is different in other parts of the UK. In Scotland for example, there is no automatic right to renew a lease, although leasehold ownership of property (known as 'feuhold') is much less common north of the border. See the Useful Sites page for related Scottish and NI websites.