To most property owners and leaseholders, extending a lease can appear daunting both legally and financially. At Kaiser Solicitors, we are committed to making complicated legal procedures such as lease extensions easier. In this guide, we explore the actual cost of extending a lease, what affects the cost, and how you can go through the process with confidence.
What Is a Lease Extension?
Lease extension is the practice of putting extra years on a property lease. It’s usually done by the leaseholder (tenant), particularly when there is a short lease left, heading towards the 80-year mark, when expenses begin to rise sharply because of something known as “marriage value.”
Primary Goals of Lease Extension:
Maintenance of the property’s market value.
Mortgage lenders’ willingness to lend.
Avoid increased extension expenses over time.
What Can Happen If a Lease Becomes Too Short?
Short leases, typically those with less than 80 years remaining, set off an increased cost to extend because of marriage value, a premium charged by the freeholder. In addition, short leases tend to deter purchasers and lenders, diminishing your property’s attractiveness and financial value.
Pro Tip from Kaiser Solicitors: Don’t wait until you reach 80 years, begin early and save a lot on costs.
How Much Does It Actually Cost to Extend a Lease?
Main Cost Components:
Premium (the fee paid to the freeholder).
Valuation fees.
Legal charges (your own and possibly the freeholder’s).
Land Registry charges and stamp duty (where due).
The Lease Extension Premium:
This is the majority of the fee, basically what you’re paying the freeholder for additional lease years.
Factors Impacting the Premium:
Factor Effect on Price
Remaining lease duration Shorter term = more expensive premium
Value of the property Higher = more expensive premium
Ground rent Higher rent = more expensive premium
Interest rates in the market May change valuation models
In the UK, legal principles remain consistent. You’ll want a chartered valuer and legal advisor, Kaiser Solicitors offers both under one roof.
Legal Costs for Lease Extensions:
Standard Legal Fees in the UK:
Service | Typical UK Cost (GBP) |
Review and preparation of lease | £800 – £1,300 |
Negotiations with freeholder | Included in above or additional £300 – £500 |
Registration and formalities | £65 – £150 |
Freeholder’s legal fees (paid by leaseholder) | £1,000 – £1,500 |
Why Lease Extensions Are Crucial for Long-Term Property Value:
A lease extension isn’t just about avoiding legal hassle; it is more about securing the worth of a property. Therefore, it is necessary to act fast and pay less than intent while making your property attractive to buyers and lenders.
Conclusion:
Lease extension fees can be daunting, but with our team, they are easy, even smart. Don’t leave your lease as a liability. If you’re a homeowner, investor, or developer, let Kaiser Solicitors help you navigate. Call Us Now, and talk to Kaiser Solicitors about extending your lease.