[source of below – http://www.jonathanberney.co.uk/index.cfm?asset_id=1419 ]
Extending your lease
If you are the Leaseholder of a Flat or House and your Original Lease is becoming shorter it can sometimes be a problem to sell the property to someone who needs a Mortgage.
It is possible to extend the Lease of your property by virtue of the Leasehold and Commonhold Act of 1993 (as amended).
As long as certain conditions are met, you can extend your Lease for a period of up to 90 years on top of your existing Lease term and there will be no further ground rent to pay. There is however a price to pay the Landlords as they loose the right to receive the ground rent and effectively do not get their property back for a further 90 years.
The Landlord will be entitled to:
- Compensation for the loss of Ground Rent and the reversion.
- 50% of the Marriage Value (The difference between the existing Value and the Value with an extended Lease, although this only applies to Leases which have less than 80 years to run).
- Compensation for loss of any Development Value.
Jonathan Berney Consultant Surveyors can advise on these matters and prepare a report for you in order that you can serve the initial notice on your Landlord and commence the procedure.
One valuable tip if you are considering an Extension is to serve the notice whilst the Existing Lease has more than 80 years to run. This avoids the cost of Marriage Value (the Leaseholder pays half of this element) and it applies when the original Lease has less than 80 years left. Thus if you Lease has an excess of 80 years to run do not delay extending until the lease has only 79 years or less as this may save you a considerable amount of money.
Although the original Residency qualification has been abandoned by subsequent legislation it is still necessary to have owned the Leasehold Interest for a period of two years prior to serving notice.
Another useful page is http://www.propertyinvestmentproject.co.uk/blog/2008/02/05/how-to-extend…