Customer news Leaseholder

Looking to extend your lease?

Following the government announcement earlier in the year to allow leaseholders to extend their leases for much longer than was previously offered, we’re now providing the opportunity for our leaseholders to apply for 990-year leases when a lease extension is requested on a voluntary basis.

There are two ways of extending your lease. The first route is to follow the statutory route as laid down in the Leasehold Reform Housing and Urban Development Act 1993 – please read further information available here. The second route is to request a lease extension on a voluntary basis which is not governed by the Act. 

In the past, we’ve followed a similar procedure for voluntary lease extensions as for a statutory lease extension, so there’s no risk involved in asking us to extend your lease, which is all we mean when referring to a ‘voluntary lease extension’. The voluntary process is summarised below:

  • On receipt of the valuation payment from the leaseholder, a lease extension valuation is instructed to assess the cost of the lease extension (known as the Premium).
  • The appointed Surveyor uses the same calculation as laid down in the Act to calculate the Premium and once the cost is approved by the leaseholder, a new lease is prepared by our solicitors and 90 years is added to the existing term of the lease, exactly as happens with a statutory lease extension.

For a statutory lease extension:

  • To extend your lease via the statutory route, you have to be eligible which means you must own the lease 100% and have held it for a minimum of 2 years.
  • The statutory route therefore excludes thousands of leaseholders such as our shared owners and 100% leaseholders who haven’t yet lived in their home for the two-year minimum period.
  • A solicitor has to be instructed upfront who serves a Section 42 Notice on us as the landlord.
  • We instruct a valuation and then have to respond with a Counter Notice agreeing or refuting any points made in the Section 42.
  • There’s then often a period of negotiation to agree the Premium which can sometimes take weeks to resolve. Once agreed, the new lease is drawn up, and 90 years is added to the existing term of the lease.

What’s the difference between the two routes? 

The key differences with a voluntary lease extension are that there is no need to serve a Section 42 Notice, there’s then no requirement for our solicitor to serve a Counter Notice, and the process is not tied to specific legal timescales. In general, lease extensions carried out on a voluntary basis complete more quickly that the statutory ones, are cheaper and the end result is the same.

Now, with a voluntary lease extension, there’s the added benefit of being offered a new lease of 990 years, which we’re unable to offer to those who choose the statutory route to extend their lease. This is purely because the law says that 90 years are added to the existing term and we can’t override that until such time as the planned government reforms come into play and the law is changed.

Is a 990-year lease more costly than a 90-year extension? 

Not at all! The Surveyors who carry out the lease extension valuations will still use the calculation laid down in the Act and will assess the value of the extended lease based on 90 years added. We were adamant that we didn’t want our leaseholders paying more for a longer lease, so you get a 990-year lease for the price of a 90-year extension.

We do want to make you aware that there will be times when we are unable to offer a lease extension at all or can’t offer a 990-year extension due to restrictions on our ownership or on the title. Examples are where we don’t own the freehold so can only extend a lease up to the length of our own lease. When any leaseholder approaches us to request a lease extension, we will get this checked out first so you know in advance whether you will be getting a 990-year lease or less. But please rest assured that we will extend your lease for as long a period as we can.

For further information on extending your lease, please email leasehold@vividhomes.co.uk.

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