Lease Extensions

The start point when you're looking to embark on a lease extension would be to, first of all, think about the premium you're going to pay and in order to do that you would need to instruct a surveyor. A surveyor would carry out a report and give you a range as best case scenario, the cheapest you would pay for a lease extension and worst case scenario, the highest you would pay for a lease extension. Once that's done, Mullis & Peake can discuss the process to extend your lease from that point.

Collective Enfranchisement is the legal term used for when leaseholders jointly come together to buy the freehold of a building. In order to do that, you would need to qualify as a leaseholder and also meet the qualifying criteria under the Leasehold Reform Housing and Urban Development Act.

When you own a leasehold house, there are two ways in which you can look to buy the freehold of the house, and that is through the statutory route and the informal route. Under the informal route, you can contact your current freeholder and see if they would be willing to sell you the freehold, or if they are not, then if you qualify under the Leasehold Reform Act 1967, you can serve notice on the freeholder, which will force them to sell you the freehold.

There are two ways that you can extend your lease and they are known as the informal route, whereby you contact your landlord and see if they would be willing to sell you a longer lease for a premium or the statutory route. The statutory route is under the Leasehold Reform, Housing and Urban Development act 1993. There's quite strict guidelines on the statutory route and it would start with once you have instructed a surveyor who's carried out valuation report, we would then prepare and serve what's known as a section 42 notice on your landlord. This will inform them that you want to extend your lease and also put forward the premium, which has come from your surveyors report. On a section 42 notice, if that's served, it means that you are entitled to an additional 90 years, plus your unexpired term at a peppercorn, which is effectively zero ground rent. Once the section 42 notice has been served, your landlord will have two months in order to serve a reply. They will come back and either admit the claim or refuse the claim. Normally, they admit the claim and they will put forward a premium that they think you should pay. There's then a period of six months where you'll negotiate on the premium and hopefully come to an agreement.

If you need to obtain a copy of your lease, then you can do this by contacting HM Land Registry, which you can do online. Or alternatively, Mullis & Peake can obtain a copy of your lease for you.

If you extend your lease, it will change your ground rent. It doesn't really matter now what route you extend your lease by. Previously, with an informal lease extension, you could still have a ground rent contained, but the law has now been updated and all lease extensions are granted at peppercorn, which means zero ground rent, and that's the same for a statutory lease extension. It is one way of getting out of doubling ground rents, which are a huge problem with people that own leases.