Lease Extension Surveyor
As experienced practitioners in Lease Enfranchisement, Copeland Yussuf offers specialist Lease Extension services to customers and clients in London, the South East, and Beyond.
Leasehold properties are becoming increasingly common within the property market, especially in larger cities like London, where most flats and apartments will be sold as a leasehold.
If you’re a leaseholder, you’ll need to know how to manage your property and lease term correctly to ensure that you don’t lose out on money down the line. One key aspect of owning leasehold interest is knowing when, how, and why you should get a lease extension.
As specialist lease extension surveyors, we can help you through various aspects of the lease extension process. All you need to do to start is contact us today.
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What is a lease extension?
A lease extension is where you pay a fee to increase the duration of your leasehold. Unlike freehold properties, leases last for a specific period of time. Once that period has expired, that property returns to the freeholder.
When the remaining period of a leasehold property reaches below a certain amount of years, issues can start to appear that can cost you, the leaseholder, a lot of money and make it much harder to sell the property.
For example, the shorter the remaining term of a lease, the more the value of your property decreases. This means that getting a lease extension will help restore your home to its full value, ensuring you get the most out of the property when you sell it.
Thankfully, due to The Leasehold Reform, Housing and Urban Development Act 1993 (The Act), leaseholders can extend their lease with little resistance from the freeholder, providing they hit certain eligibility criteria.
When getting this statutory lease extension, you’ll need to appoint a Chartered Surveyor, such as Copeland Yussuf, to provide a valuation of the property and help you negotiate a fair price to pay the freeholder for the lease extension. Once a fee and agreement are reached between the freeholder and leaseholder or through the First Tier Tribunal, your ground rent will become zero. This is officially known as being reduced to a ‘peppercorn’. Depending on the property, your lease will also extend another 90 or 50 years on top of the original term.
Why you may want a lease extension?
There are many reasons why getting a lease extension can benefit you and why you should instruct a surveyor like Copeland Yussuf to provide a valuation.
One of the main benefits is that getting one can help you obtain a higher value for your property when you sell it. A property with 85 years left on its lease will have a much lower value than one with 105. This means getting a lease extension can help you get more for it, although ensure that the potential profit is large enough to cover the lease extension costs.
Another common reason you may want to extend your lease is that it makes it cheaper to own in the long term. Extending a lease reduces the ground rent you have to pay to zero, meaning that you’ll no longer have to pay this reoccurring fee, making it more affordable in the future.
As well as this, there are also many other reasons why you should get a lease extension before you reach a certain amount of remaining years on the term. If the remaining lease term goes under 80 years, it’ll be more difficult for someone to get a conventional mortgage. They’ll have more limited options, which can make trying to sell the property challenging.
In addition, you can also end up in a situation where you pay more for a lease extension if you leave it too late. When the lease period falls below 80 years, you’ll have to contribute 50% of the marriage value in addition to the costs to extend your lease.
The marriage value is defined as how much the property’s value increased thanks to the lease extension. So if a lease extension increases the value of a property from £200,000 to £280,000, the marriage value is £80,000, and you’ll have to pay £40,000.
It’s for this reason, as well as the difficulty in getting a mortgage, that you should consider getting a lease extension when you have around 85 years left on the lease.
Thankfully, getting a lease extension with the help of our Chartered Surveyors is a straightforward process, and we’ll be able to help you through it too. You’re protected by using the statutory route for a lease extension, thanks to the Act. This is another benefit of getting a lease extension. The freeholder is unable to set the price for the lease extension. They can reject your initial offer, which has been calculated to the law, but must agree to any prices that the First Tier Tribunal has set.
The Lease Extension Process
If you’re considering a lease extension for your leasehold property, there’s a process that you need to follow. At Copeland Yussuf, we’re extremely familiar with this process and adhere to it strictly to ensure you get a quality experience that adheres to the highest industry standards.
To get a lease extension, you must instruct and hire a lease surveyor and solicitor specialising in Lease Enfranchisement. You’ll do this early on in the process, and once you have, you can use us to support you through this process. The full process will look something like this:
First, check that you’re eligible for the lease extension. Some restrictions may prevent you. A surveyor can quickly check if you can get a statutory lease extension.
Once you’ve confirmed that you’re eligible for this process, you’ll need to contact a Chartered Surveyor like us to inspect your property and details to get an accurate valuation. This valuation will be used to determine the offer you make to your freeholder when requesting a lease extension.
Once a valuation has been agreed to and finalised, you’ll serve a Tenant’s Notice, also known as a Section 42 Notice, to the property’s freeholder. This notice details a formal offer on the premium you want to pay and is based on the valuation your Chartered Surveyor made.
Most surveyors will give you a range of what the premium should be and also provide a lower premium price that you can offer for negotiation purposes. This ensures you’re in control and have the upper hand during this period.
Once a Section 42 Notice has been served, the freeholder has a maximum of two months to respond with a counteroffer or an agreement. When you do agree on the price, you’ll have to pay a deposit to the freeholder of either 10% of the lease valuation offer or £250, whatever is the higher amount. You’ll need to pay this within 14 days of the agreement.
If no agreement has been reached within six months, consider getting the matter sorted at the First Tier Tribunal. When you apply to the First Tier Tribunal, they’ll investigate and use your surveyor’s valuation to reach a final price for the premium the freeholder must agree to.
Make sure you send an application before six months pass since you issued your Section 42 Notice, as this is the latest an application can be made.
This entire process can easily take 12 months from start to end, so contact one of our Chartered Surveyors and begin the process far before your remaining lease term drops below 80 years.
Also, be aware that if you have a mortgage on the leasehold property, you need to obtain consent from the mortgage lender before getting a lease extension. In addition to this, you also need to arrange for a deed of substitution to be signed.
Lease Extension Eligibility
When you instruct a Chartered Surveyor to provide a property valuation, they’ll first check to see that you’re eligible for a statutory lease extension. The criteria you need to hit to qualify for an extension, based on The Leasehold Reform, Housing and Urban Development Act 1993, are:
- You’ve been the leaseholder and have owned the property for at least two years .
- You’ve owned a long lease on the property, meaning that the lease had an original term of at least 21 years.
You can’t get a statutory lease extension if the property’s freeholder is a charitable trust or if you own a commercial lease. You can still attempt to make a lease extension if you haven’t got eligibility under the Act, and a surveyor will still do a valuation and negotiate a price for you. However, if you’re ineligible, the freeholder has no obligation to accept your lease extension and can demand a premium much larger than the property’s value.
Why Choose Copeland Yussuf?
If you want to extend your lease in the South East of the UK, then we’re the premier choice in the area. We’ve been serving various clients for decades and have the experience, skills, and knowledge to provide a great property valuation and ensure a convincing Section 42 Notice is served.
We have cultivated a great reputation in our area and are the registered panel surveyors for various high-profile housing groups, councils, and more, offering them unparalleled services that have allowed us to build long-lasting relationships.
We’re proudly regulated by RICS, the Royal Institute of Chartered Surveyors. This ensures that we maintain industry-leading standards over the years and are always on the cutting edge of new developments and advancements. We follow guidelines from the law and adhere to The Leasehold Reform, Housing and Urban Development Act 1993 to ensure that our valuations and processes are accurate and some of the best in the business.
Furthermore, Copeland Yussuf is also a member of the Association of Lease Extension Practitioners, meaning that we’re considered one of the best and most reliable surveyors in the field.
We offer various tailored and individual services within the lease extension process, helping you get the most from the process. We can:
- Check your eligibility for a statutory lease extension
- Inspect and provide an accurate valuation of your home
- Suggest an accurate lease extension premium to offer to the freeholder
- Liaise and assist the Property Chamber in the event of a First Tier Tribunal
We’ll do what we can to ensure that you have a smooth experience through the process of getting a lease extension.
Through decades of service to the London and South East community, we’ve received numerous reviews and testimonials from past clients and customers. Our Chartered Surveyors for lease extensions have built a fantastic reputation in the area, and we hugely appreciate all the feedback.
Here are a few examples of how we’ve helped countless landlords, leaseholders and tenants in situations similar to yours. Reviews have been sourced from Google Reviews, Yell.com, and private feedback.
Lease Extension Surveyor FAQs
How much does getting a lease extension cost?
The amount you have to pay for a lease extension is determined by various factors based on your property, so it's hard to say how much it will cost you. Your freeholder is entitled to compensation for the financial loss an extension will cause, which is why you pay a premium in the first place.
What influences how much you pay includes:
- The decrease in value of the freeholder's interest that was caused by the additional years added
- The increase in the property's value
- Compensation to the freeholder for reducing the ground rent to zero
To help you figure out how much you'll have to pay for a lease extension, we have a helpful lease extension calculator so that you can figure out a price for you.
If you have 82 years left on your lease for a property worth £300,000 where you're paying ground rent of 60 per annum, you can expect to pay around £6,500.
Can you get multiple lease extensions in succession?
There are no restrictions to how many times the lease of a property can be extended, meaning you can extend the lease multiple times as long as you meet the criteria.
That said, because one extension usually increases the lease term by either 90 or 50 years, depending on the property type, it's unlikely that you'll ever need to extend the lease yourself twice in one lifetime.
This is because, by the time the remaining term drops back down to around 80 years, it's highly probable that you'd have moved on from the property. If you have passed the property down to a relative, they can still increase the lease period.
What's the difference between a freehold and a leasehold property?
A freehold property is where the owner has possession of the house indefinitely and can do what they want with the property. They will have ownership of the house until they decide to sell it, and they also own the land and airspace the property is in.
A leasehold is where you technically only own the property for a specific, set period. Once that time expires, the ownership automatically goes back to the freeholder.
Can a freeholder refuse a leasehold extension?
If you're eligible for a lease extension under the rulings of The Leasehold Reform, Housing and Urban Development Act 1993, you have the right to a lease extension without any resistance or pushback.
Even if the freeholder disagrees with your offered fee, the court will eventually finalise a fee they will need to accept.
They can only reject your proposal if you do not meet the criteria and instead attempt to get a lease extension through informal means directly with the freeholder.
Do you need a surveyor to get a lease extension?
If you're using the statutory lease extension that grants you the right to extend your lease, you'll be required to get a surveyor and solicitor. These are needed to serve the notice and provide a valuation for your property.
Plenty of legal scenarios and processes also need to be followed, which can make things really difficult if you're without a surveyor, which is why it's best to use Copeland Yussuf when getting a lease extension.
What if I can't get hold of the freeholder?
You need to issue a Section 42 Notice to the property's freeholder to start the lease extension process. This can be a big issue if you don't know the location of the freeholder or how to contact that.
If you cannot contact your freeholder, you need to apply for a Vesting Order from the country court to proceed. However, you must first prove that you've made all reasonable attempts to locate the missing freeholder.
Things you'll need to do before you can apply for a Vesting Order include the following:
- Placing adverts in the local newspaper.
- Hiring a search agent to find the freeholder.
- Visiting the last known address of the freeholder.
- Checking the probate records.
If you're still unable to locate the freeholder after all of this, you can get a premium determined at a First Tier Tribunal and have the court grant you the lease extension.
When's the best time to get a lease extension?
You want to get a lease extension at the perfect time when it can help you save more money and eventually increase how much you'll be able to get when you do sell the property. As the remaining term on your lease drops, so does the value of your property. In addition to that, your premium for extending the lease will increase, meaning it will cost you more to get an extension the longer you leave it.
As people will struggle to get a mortgage when a lease reaches under 80 years, and because you'll have to pay marriage value when it goes beyond this point too, many advise leaseholders to extend their lease before it gets to this point. For many, the sweet spot is around 85 years left, as this gives you enough time and leeway.
If you're buying a property with less than 90 years on the lease, you should be wary and act quickly to extend it to prevent any issues down the line.
How common are leasehold properties?
When looking at the entirety of the UK, around 8% of all houses were leasehold properties in 2021, meaning they make up a relatively small share of the property market. However, leaseholds are much more prevalent in flats and apartments, as 58% were leaseholds.
This is because a freeholder will usually own the entire building complex that contains the flats and then sell those single units as leaseholds.
As flats and apartments are much more common in the South East of England, particularly in London, more people in this area will need the assistance of Copeland Yussuf to help with lease extensions. Due to our area's many properties, we're experienced and offer complete Lease Enfranchisement.
What does it mean when ground rent is reduced to 'a peppercorn'?
When extending a lease, you'll find that your ground rent will be 'reduced to a peppercorn' among many other benefits. This phrase you'll likely see in many documents means that your ground rent will be reduced to zero.
The term peppercorn is used instead of zero because for a contract to be legally binding, there needs to be a consideration, but it doesn't need to be an actual value. Historically a peppercorn has been used to illustrate a meagre, nominal amount to satisfy this requirement so that a legally binding lease contract could be created.
How long does a lease extension have to be?
You'll use the statutory route when getting a lease extension with the assistance of a Chartered Surveyor like us. This uses guidelines and legislation to ensure you're always entitled to a lease extension as a leaseholder. When following these guidelines, you'll automatically extend your lease for 90 years on a flat or apartment or 50 years on a house. This means that these are the minimum amounts you can extend your lease through this official route.
However, you can informally extend your lease by agreeing directly with your freeholder. This is commonly done if you're ineligible for a statutory lease extension. When doing this, there is no minimum limit to how long you can extend the lease, meaning you could extend it for a year (although there won't be any good reason for doing that).
Do note that when extending a lease in this informal way, the freeholder can reject your request and doesn't have to follow the rules laid out by The Leasehold Reform, Housing and Urban Development Act 1993.