As a shared owner, you may wish to consider extending your lease. This guide talks you through what lease extension is, the benefits and the costs.
What does a lease extension mean?
Your lease is a contract granting use of the property for a number of years. Your leasehold term is for a set amount of time, which is typically 99 or 125 years but can range anywhere up to 990 years. The number of years your lease is granted will be set out in the lease particulars and on the Land Registry title documents.
As your lease gets shorter, the value of the lease decreases and in turn can affect the value of your home. It may also cause issues when obtaining a mortgage/re-mortgaging, as lenders are often reluctant to lend on a lease with less than 80 years left on it.
A lease extension may provide you with more security. If your lease expires, your property will revert to us as we are the freeholder of the property. This will mean that you no longer have a lease and therefore no legal right to occupy the property.
As a Shared Owner you do not qualify for a new lease as defined in the Leasehold Reform, Housing & Urban Development Act 1993 and therefore cannot extend your lease under this legislation, but we do offer an informal lease extension process.
Informal lease extensions
Extending your lease through our informal lease extension process would be by legal agreement between us and you. It follows broadly the same principles that the Leasehold Reform, Housing & Urban Development Act 1993 Act offers for the statutory route available to 100% residential leaseholders.
The informal route is much simpler for both parties, only one valuation is required, and we have the option to offer more flexibility on what we can agree if you wish to update or change any of your existing lease terms.
The offer to extend your lease is subject to following our informal lease extension process where all decisions to extend your lease are at our discretion.
How long will my lease be extended for?
For all lease extensions, your current lease will be surrendered, and we will grant a new lease for the extended term.
We’ll extend your lease by 90 years in line with that on offer under the statutory process if we are the freeholder of your home. Where we’re not the freeholder, we’ll offer you the maximum term that we can within the limitations of our own Head Lease. We’ll confirm the term that can be provided as part of our process.
Further support
You can visit the Lease Advice website for impartial advice and use their lease extension calculator to get a guide price for extending your lease.
To apply for a lease extension, or for more information, please contact the Leasehold Team at leasehold@housingplusgroup.co.uk
What costs are involved for you?
All costs correct at time of publication
| Fee | Cost | Time period when fee is collected |
| Valuation Fee
| £850+VAT | Payable in advance: we will instruct the valuer |
| The Housing Associations Legal Fees and Disbursements
| £1250 + VAT | Payable upon completion or withdrawal of the process |
| The Housing Associations Administration Fee | £250 | Payable upon completion or on withdrawal of the process |
| Premium | The Premium you will pay will be determined by the appointed RICS Surveyor and will be calculated using the standard formula provided under the Leasehold Reform Housing and Urban Developments Act 1993 | Payable upon completion |
| Lender fee (if applicable) | Variable (see below) | Cost of obtaining a Consent to Deal
|
The Premium is determined by an independent specialist Chartered Surveyor using the standard formula methods set out under the 1993 Act. The premium is designed to compensate the landlord for the loss of ground rent and the fact that the right to get the property back at the end of the term is postponed by 90 years. In addition, Homes Plus may be entitled to half of the “marriage value”. The marriage value is the increase in value as a result of the extension. No marriage value is payable where there is over 80 years left on the term of the lease.
The Government sponsored website at www.lease-advice.org contains a very good plain English guide to how the lease premium is calculated. There is also a calculator on this site you can use to obtain a rough idea of what the premium and marriage value (if applicable) is likely to be.
Other costs you may incur:
| Your Mortgage Provider’s Fee | If applicable: These costs are not payable to the landlord, but you will need to consider them and take financial and/or legal advice if required.
|
| Land Registration Fee | |
| Change of any terms | |
| Your Solicitors fee |
Timeframe
An application to extend a lease usually takes between 8-12 weeks. However, this can be shorter or longer and leaseholders need to allow for this.
While all efforts will be made to take into account individual circumstances, no guarantees or assurances can be provided in relation to timing so please consider the effect this may have on the re-mortgage or the sale of your leasehold property.
Independent Legal Advice
We recommend seeking your own independent legal advice before deciding to proceed with a lease extension.
The advice should cover the legal, valuation and financial aspects of the proposed lease extension. You must make sure you have sufficient information and advice to decide whether a lease extension is the correct route for you.
For shared ownership leases, the need to extend a lease for saleability and mortgage requirements always needs to be balanced against the issue of whether it is better to staircase up. It is important to understand that extending the lease can, depending on the market at the time, increase the value of the property. This means that staircasing in the future could be more expensive. You also should consider the possible effect on rent increases after staircasing.
What now?
To start your request to be considered for a lease extension you will need to complete and return to us our Lease Extension Application Form. Please email leasehold@housingplusgroup.co.uk for more information. You will need to have a clear service charge and/or major works account or be on, and kept to, an agreed repayment plan in order to proceed.