Extending your lease will increase the value of your property and, at the same time, make it easier to sell. A lease extension adds years onto your lease and extends the time you have before ownership of your flat reverts to the freeholder.
The process of extending one’s lease can be lengthy and expensive. The price will vary depending on the property’s value, the number of years left on the lease, the property’s value after the lease extension, the ground rent payable and the attitude of the freeholder.
Cost guidelines for extending a lease
As mentioned above, the cost of a lease extension varies considerably depending on various factors and particularly the remaining lease term and the level of ground rental and any future escalations.
As an example, for a flat with 80 years left on the lease with an expected value of £400,000 once the extension has been completed and removing a present £100 per year ground rent rising to £300 per annum, the lease extension premium will be somewhere in the region of £7,000 to £10,000, plus the below-mentioned costs. Note the leaseholder also pays most of the freeholder’s costs.
For leases with a remaining lease term of fewer than 80 years, a premium for a lease extension can increase significantly as the freeholder/landlord is entitled to 50% of what is called “marriage value”, that being the increase in value of the flat due to the proposed lease extension. So, in the above example, but with only 79 years left on the lease, the overall premium could increase to approximately £24,000 and valuation and legal costs might also increase.
Please see the below table showing guidelines of costings (excluding VAT where applicable) for a lease extension premium of £10,000 as with the example above.
| Item | Typical Cost |
| Surveyor valuation | £900 (estimated) |
| Solicitor fees (for you) | Please contact Beverley Morris & Co. |
| Freeholder valuation | £900 (estimated) |
| Solicitor fees (for freeholder) | £1200 – £3000 (estimated) |
| Surveyor negotiation costs | £150-£220 per hour |
| Land Registry fees | £20-£45 |
Click here to use the Leasehold Advisory Service online calculator to calculate a rough estimate of the cost of your lease extension.
How to save money when extending a lease
Extending a lease can be an expensive process, so here are a few ways to help you reduce the costs.
- Ensure you instruct a specialist surveyor and specialist solicitor. Although it might seem a little ‘backwards’ to spend more money initially, it will likely save you money in the long run. Trying to save on professional costs could lead to your paying more than you should for your lease extension.
- Abandon any attempt to achieve an informal lease extension if your freeholder is protracting the negotiations unnecessarily. By following the process laid out in the 1993 Leasehold Reform Housing & Urban Development Act, your freeholder will be obliged to extend your lease by an additional 90 years and reduce the ground rent to “a peppercorn” which effectively means that no ground rent will be payable. A freeholder may no longer use an informal lease extension as a way of increasing the ground rent payable under your lease since recently introduced legislation prohibits a freeholder from charging any ground rent on the grant of a new lease.
- Always aim to extend your lease before it falls below 80 years. After this, you will be required to pay the freeholder an additional cost of ‘marriage value’, which means that extending your lease will become progressively more expensive.
Lease Extension Solicitor Blackheath
Typically, extending a lease takes between 3 and 12 months, depending on whether terms are agreed upon, or the formal procedure is followed. Where the formal procedure is followed, statutory guidelines apply, which set time limits for each stage of the process. The process is laid out in the Leasehold Reform Housing & Urban Development Act.
Always instruct a trusted solicitor to avoid unexpected costs or other issues arising out of your lease extension.
The team of lease extension solicitors at Beverley Morris & Co. will be happy to guide you through the process and ensure you receive the best outcome.
We will always ensure you are fully aware of any costs involved, providing clear information on our fees throughout the process. When we provide a quotation for you, we try to provide as much information as possible, so that you have a clear understanding of what the transaction will cost from the start.
Call us today on 020 8852 4433 or email enquiries@beverleymorris.co.uk. Alternatively, please fill in this enquiry form.