It took far took long to sort and cost far too much but in 2021 we finally managed to sort our lease extension on our flat.
All comments here are based on the situation in 2021, laws and processes may have changed since then.
Informal offer of a new lease
When we initially started looking into extending the lease we had around 81-82 years left on lease. We contacted the freeholder about a lease extension, they initially quoted something stupid like £7k with a very significant increase, not for an extension but for a new lease of around 90 years. 99 years that started 3 years ago, so actually 96 years!
Then they would need £750 on top for their legal fees.
Why wasn't that offer acceptable?
Marriage value
Once a leasehold drops under 80 years the price to renew/extend starts increasing due to 'marraige value'. So if we accepted the offer of a new lease we'd have 10 years before marriage value becomes a consideration once again and might want to consider extending again. If we did that we'd end up paying £8-10k every 10 years to make sure the property maintained its sale value.
Formal vs informal route to leasehold extension
Informal leasehold extension
When we initially approach the freeholder and got their first offer, this was an informal offer.
In that we could choose to accept and be done with the renewal quickly. In their offer letter they stated clearly that offer was non-negotiable.
Obviously I had been doing some research and discovered the because we had owned the flat over 2 years we had certain rights under law when it comes to lease extension.
Formal leasehold extension
As we owned the flat for over 2 years we were entitled to certain rights in law when it came to extending the lease:
- Extension of lease by 90 years, remember freeholder initially wanted us to take a new lease of 90 years, not extending existing lease by 90 years
- Removal of ground rent - again, not offered by freehodler in the informal offer
So obviously it was going to be worth looking into the formal route to lease hold extension to see how it compared in cost vs the informal route the freeholder was (obviously) hoping we'd accept.
In order to progress the formal route to leasehold extension we had to employ both a surveyor and a solicitor. As we would find out later, we also had to pay for the freeholder's surveyor and solicitor.
Surveyor duties
The surveyor we used was a specialist in leasehold extensions so knew the process well. She worked an appropriate marriage value based on value of flat and years left on the lease. She also presented that to the freeholder's surveyor and led on negotiations on price the freeholder.
Thankfully both the surveyors were happy to come up with figures without the need to visit the flat, which would presumably have resulted in increased cost.
Final Result & costs
Remember these are what we paid in 2021, for an extension of 90 years to our lease & removal of ground rent on a lease with approximately 78 years remaining.
Costs will vary based on value of property (estimated post extension) and years left on the lease now.
| What / who | £ |
| Surveyor | 700 |
| Solicitor | 1400 |
| Freeholder legal costs (surveyor/solicitor) | 2400 |
| Lease extension fee | 6000 |
| Total | 10500 |
Certainly a better deal than first offered by freeholder which, for similar money, would have resulted in a lease half the length and with ground rent high enough that it may have been problematic with lenders when we sell.
Recommendations from my experience
Ask for what they freehoder is currently offering in terms of extension years / ground rent. If it doesn't feel like a deal (see above) then talk to a specialist leasehold surveyor for help in service notice on freeholder that you want to go the formal route.
Seriously, find a leasehold specialist surveyor. I'll link the one we used in references, but whoever you choose, make sure they are a specialist in leasehold extensions.
Reference
Alison Stone - Surveyor we used