If you own a flat, letting your lease drop too low wipes its value quicker than dodgy stone-cladding. Yet in England and Wales, powerful laws let you extend leases for a fair price.
This guide looks at whether you should extend and how it works.
In this guide
Should I extend my lease?
There are over four million leasehold flats in England and Wales and it's the most common form of flat ownership.
If you own a leasehold flat, you effectively rent it for a certain amount of time. You own the right to hang out there, but not the building itself. Scottish and Northern Irish leasehold laws differ.
Read more on the four main types of home ownership in England and Wales.
This where you own your pad outright and the land it stands on. You pay maintenance cost and you will not have to extend your lease. As a rule of thumb, most houses are freehold and most flats leasehold.
If you own a leasehold flat, you effectively rent it for a period of time, specified on the lease. The freeholder (or landlord) is usually responsible for insuring the building and maintaining communal areas.
Share of freehold
This is where a building's flat-owners club together to each buy a share of the freehold. They are responsible for insuring and maintaining the building.
You still need to extend the lease. In this case you can usually extend it to 999 years for free (if the other flat-owners who own the freehold agree). The only cost would be legal fees.
Commonhold was introduced in 2002 and usually applies to new-build flats. It's similar to share of freehold, but there is no lease, so the years don't count down. Few have taken up this form of property ownership, so it is relatively untested.
Who can extend?
Under the 1993 Leasehold Reform Act, most flat-owners are legally entitled to get 90 years added to their lease at a fair market price. In a nutshell …
Should you extend?
Extending a shorter lease to a decent length can add thousands to your property's marketing value. Generally, the shorter the lease, the lower the asking price.
If your lease is ticking down to 80 years, READ ON!
We want to sear a point onto your brain. There is a magic number of years at which leases become much pricier to extend. That magic number is:
Want to ditch your freeholder too?
Leaseholders must pay ground rent (usually small) and service charges (often a fair whack) to the landlord.
Frankly, some freeholders would take the pennies off a dead man's eyes, charging £10,000s extra for repairs and picking pricey insurance policies paying the most commission.
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How much will it cost to extend my lease?
The price depends on several variables, including the flat's value, the lease length and ground rent. It also depends on your negotiations.
Bear in mind leasehold law is hideously complicated so costs can vary dramatically.
Step-by-step guide to extending your lease
The lease extension process can go slower than a year in prison, so if you're thinking of selling your home, start early. Though it's worth noting that the clock stops counting once you serve the notice, so if you file at 81 years, the lease won't tick down to 80.