During the course of owning a leasehold or shared ownership property you may need to extend your lease. The term of your lease is likely to be either 99 or 125 years (unless you have a new model lease).
If your lease term falls under 80 years it could affect the value of your property and you may find it more difficult to sell and secure a mortgage. The premium a leaseholder pays to a freeholder for extending the lease follows a set formula. This formula changes the moment the lease term drops below 80 years, as at that point the formula takes into account 'marriage-value'.
If your lease falls below 80 years it will cost you more to extend the lease. To prevent your lease falling below 80 years you can choose to explore two routes to extend it, you can either follow the statutory route or Hightown will allow leaseholders and shared owners to extend the lease using a voluntary route.
To be eligible for the statutory route, you will need to be a leaseholder and have owned the property for two years or more and have over 21 years remaining on the original lease.
Shared owners can only extend their lease by using the voluntary route, Hightown will confirm the cost to extend the lease and there is no right of appeal. In most cases of lease extensions, you will get an extra 90 years added to the existing remaining term.
The Costs and the process
The current valuation fee is £600 (inclusive of VAT), which is payable upfront. There are also administrative fees and solicitor fees (approximately £1500 plus VAT, plus disbursements). The lease extension premium is not included as part of these fees, the premium will be confirmed once a formal valuation has been carried out.
We will arrange for a surveyor to visit your property and provide a valuation report and confirm the cost of the lease extension.
If you are happy to proceed with the lease extension, you will need to instruct a solicitor to act on your behalf. Hightown will also instruct a solicitor to liaise with yours and finalise contracts.
Hightown also charge an administrative fee of £220 (inclusive of VAT), which will need to be paid upon completion.
It is worth noting that Hightown are unable to determine the exact cost of the lease extension until a formal valuation has been carried out. You can obtain an estimate via The Leasehold Advisory Service website; Lease Calculator but this is designed to only offer you an indicative value range.
If you would like any further information, please contact the Home Ownership Team by email home.ownership@hightownha.org.ukor call 01442 292535.
