Lease extension
Many leases start at 99, or 125 years. If a lease gets too short, it can become more difficult to sell the property as mortgage lenders generally require at least 85 years remaining on a lease before they will lend on it.
How can I extend my lease?
Leaseholders can choose to extend their lease through the Formal, or Informal routes. Shared owners do not have a legal right to a lease extension and so cannot use the Formal route, but Soha will always offer an extension where possible, using the Informal route.
The Formal route will be more expensive in legal fees as it is prescribed by law and the majority of the work will be managed by the solicitors. The lease will be extended by 90 years (so if you have 85 years left on the lease, it will be increased to 175 years) and the Ground Rent reduced to zero.
The Informal route is where Soha can decide the terms it would like to offer. Our current offer is to extend your lease up to 990 years and reduce the Ground Rent to a peppercorn (zero). In some circumstances it may not be possible for us to offer these terms, particularly if we are not the freeholder, in which case we will offer the best terms that we are able to.
With the Informal route, much of the work is done by Soha rather than our solicitors and so the legal costs will be greatly reduced.
When should I extend my lease?
It is always best to extend your lease before it gets below 80 years as it then begins to get more expensive as you may have to pay a ‘marriage value’ in addition to the usual fees. It is often best to extend a lease before you begin a sales process, as extending a lease can take some time and might hold up a sale.
How much will it cost to extend my lease?
- Valuation fee – costs vary, but expect to pay between £500 – £700
- Your legal fees – you will need a solicitor to act on your behalf
- Our legal fees – from £750 plus VAT (Informal), or £2000 plus VAT (Formal)
- The premium – This will be the total of:
- The reduction in value of the landlord’s interest in the property (removal of ground rent, delayed reversion of property to the landlord at end of lease)
- 50% of the marriage value (the increase value of the property with an extended lease), if applicable (under 80 years remaining)
- Any compensation payable in relation to other loss or damage to the landlord arising from the lease being extended
Leaseholders who own 100% of their property will pay the premium in full. Shared owners will pay the percentage of the fee to match the share that they have in their property (i.e. if the owner has a 50% share in their property, they will pay 50% of the premium).
Are there any reasons that I could not extend my lease?
If you are in breach of your lease we may not agree to an extension until the breach had been rectified
If we are not the Freeholder, we will need to consider the terms and length of our head lease. If an extension of that is required to be able to facilitate your lease extension, additional costs may be incurred.
I am a shared owner, can I extend my lease?
Yes. Although shared owners do not have a legal right to a lease extension, Soha will provide this service through the informal route
What is the process for extending my lease?
Complete our Application Form (below), pay the valuation fee and we will arrange for the valuer to visit your home.
Once we have received the valuation report, we will work out the Premium and write to you informing you of the cost and the terms.
Once agreed, our solicitors will proceed with a deed of variation to extend the lease which will then be registered with Land Registry by your solicitors.