Frequently asked questions
We have compiled a list of questions we are most frequently asked, however please do call us to discuss any leasehold issue. We can give you free, no obligation advice to help you decide on the option best suited to your situation.
What is a ‘Statutory’ Lease Extension?
This is a simple option to increase your existing lease length by 90 years and reduce your ground rent to a ‘peppercorn’.
What is a peppercorn ground rent?
This is a token or nominal rent, rarely collected by any freeholder. The name comes from leases where the rent was one peppercorn a year, effectively nil.
What is considered a short lease?
Many mortgage lenders consider anything below 80 years to be a short lease. Consequently the length of your lease may impact your choice of lender and mortgage products available.
What is a section 42 notice?
A Section 42 Notice (also known as the Tenant’s Notice) is served on the landlord/freeholder which starts the statutory lease extension process.
What is a deed of assignment?
If you are planning to sell your property but a short lease is limiting your sales value and potential, you can extend your lease, alternatively, you could sell with the benefit of a ‘Deed of Assignment’. This means that the new owners do not need to wait for two years of ownership before applying to the freeholder to extend the lease (statutory). This is something we can work with your solicitor to put in place.
What happens if the Freeholder is absent?
If you are looking to extend your lease or buy your freehold but the freeholder cannot be found, the ‘Leasehold Reform Housing and Urban Development Act 1993’ give leaseholders the right to continue the process of extending their lease or buying the freehold.
To proceed, we will work closely with your solicitor to ascertain that every effort has been made to contact the freeholder. Once it is established they are absent, a Vesting Order will be issued to the County Court.
Once the County Court agree that the freeholder is absent, you will require an Expert Valuation Report which will then be issued to the First-tier Tribunal. This process will decide the cost of the lease extension premium or freehold purchase price.
What does ‘marriage value’ mean?
If your lease has fallen below 80 years then you are liable to pay the freeholder. This is because the value of a property with an extended lease is higher than one with a lease below 80 years, therefore the freeholder can benefit from this value increase. They are allowed to request up to 50% of the increased value of the property, in addition to the lease extension premium. Needless to say, it’s in a leaseholders’ interest to increase the lease before it reduces to 80 years.
What is Collective Enfranchisement?
It is a right, subject to qualification, for the owners of flats in a building, and sometimes part of a building, to join together and buy the freehold of that building. The relevant act is the Leasehold Reform Housing & Urban Development Act 1993 (as amended).
Provided at least 50% of the flats in the building (who are qualifying tenants) participate, and the building qualifies, then the landlord cannot refuse.
I am concerned for my elderly relative. They have a low lease but are not able to manage this?
As long as you have Power of Attorney or your relative is able to instruct us themselves, then we can act for them and keep you both updated throughout the process. We offer a bespoke process as we know every lease and every client has different needs.
What is your Fixed Fee and what does it include?
We charge £2,500 + VAT. This is a fixed fee and covers our time in managing the transaction from start to finish. In addition, this will cover us instructing the surveyor to produce the report ready to submit to the freeholder and freeholders’ solicitor. This will also cover your legal fees. In most cases there is no more to pay, however, should the freeholders’ surveyor enter into negotiations and the transaction become protracted, there may be additional fees for their time.
Other possible complications could be if the case goes to the tribunal, however, this will be discussed with you throughout the process and you will be made aware of any potential extra costs in advance.
I don’t think I can afford the lease extension, what can I do?
With the right financial advice, a lease extension will result in your property being more valuable when you come to sell it. We are able to link you with our Financial Services Team, who will talk you through how you can finance this extension to protect your investment.
Do I need to pay stamp duty when extending my lease?
Yes. If this is relating to your own residence then the Stamp Duty is based on the same thresholds as standard Stamp Duty. These are explained below.
For Example, you increase your lease on your only residence and the premium is £126,000, you will need to pay £2520.00 in Stamp Duty (2% of the premium).
If you’re extending the lease on an additional property, other than your main residence, there is a different calculation. These are detailed below.
For Example, you increase your lease on your additional property and the premium is £126,000, you will need to pay 3% the first £125,000 and 5% on the next £1,000 (totals your £126,000 premium) therefore a £3,800.00 stamp duty fee will be payable.