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Lease Extension Rules UK

Lease extension rules in the UK can be complex, but they're designed to protect tenants who have long leases on a property. The rules state that if your lease is under 90 years remaining and you've owned the flat for two or more years, you may have the right to extend it by an additional 90 years. This process involves serving a formal notice to your landlord, usually in the form of a Section 42 Notice, which starts the clock ticking on the extension period.

How Lease Extensions Work​

The process of extending a lease can be lengthy and involves several steps. It typically begins with you serving the Section 42 Notice to your landlord, stating your intention to extend the lease. Your landlord then has two months to either agree to the extension or serve their own counter-notice. If they refuse the extension, you may need to apply to the First-tier Tribunal (FTT) for a determination on the premium, which is the cost of extending the lease.

What You Need to Know​

  • Eligibility: To be eligible for a lease extension, your lease must have 80 years or less remaining and you must have owned the property for at least two years. If you've inherited the flat, you're also eligible as long as it's been in your family for two or more years.
  • Premium: The premium is the cost of extending the lease. This can be negotiated with your landlord, but if agreement can't be reached, an independent valuer will determine a fair price. You may find yourself paying around £2-£5 per pound, plus VAT and other costs.
  • Consultation: It's advisable to consult with a property solicitor experienced in lease extensions. They can guide you through the process and ensure your rights are protected.

Additional Costs​

While extending your lease can increase the value of your flat, there may be additional costs involved:

  • Solicitors' fees: Engaging a specialist solicitor will cost around £1,500 to £2,000 plus VAT.
  • Surveyor's fee: You'll need to instruct an independent valuer who can assess the property and determine a fair premium. This will cost around £800 to £1,200 plus VAT.
  • Stamp Duty Land Tax (SDLT): If you're purchasing a new flat with a lease extension, you may be liable for SDLT on the increased value of your lease.

The Benefits of Lease Extension

Extending your lease can have numerous benefits:

  • Increased property value: Extending your lease by 90 years can significantly increase the value of your flat.
  • Reduced uncertainty: With a longer lease, you'll have more certainty over your living situation and be less likely to face unexpected issues with your landlord.

Before embarking on the process, ensure you're aware of all the costs involved and consider consulting with a property expert.