The law relating to lease extensions and enfranchisement has undergone significant reform following the enactment of the Leasehold and Freehold Reform Act 2024. Further legislative changes may continue to be introduced. Please seek independent professional advice and contact us for information about the process applicable at the time of your application.
Eligibility for purchasing the freehold
Only qualifying leaseholders can take part. A qualifying leaseholder requires a long lease, which is generally:
- A lease for a fixed term in excess of 21 years when first granted
- The continuation of a long lease under the Local Government Housing Act 1989 following the expiry of the original term
- A shared ownership lease where the leaseholder’s share is 100%
Even if the leaseholder satisfies the above criteria, he or she will not be a qualifying leaseholder if any of the following cases apply:
- The landlord is a charitable housing trust and the flat is provided as part of the charity’s functions
- The leaseholder owns more than two flats in the building
- The leaseholder has a business or commercial lease
The building:
- There must be a minimum of two flats in the building
- At least two-thirds of the flats must be leasehold
- No more than 25% of the internal floor area to be in non-residential use
Lease extension
As your lease term decreases, there are associated negative implications that you should be aware of. This can include difficulties in selling or re-mortgaging as well as the decreasing value of your home.
Depending on your eligibility, as a leaseholder you may have statutory rights to extend your lease. The term and conditions of any extension will be determined in accordance with legislation at the time. Please obtain independent legal and valuation advice before proceeding.
The potential benefits of extending your lease include:
Easier to re-mortgage
Mortgage lenders often have minimum lease term requirements. A shorter lease may affect the availability of mortgage products and remortgaging options, although lending criteria vary between lenders.
Easier to sell your home
A short lease term is likely to make your home less attractive to potential buyers. Also, the value of your home is lower when the lease term is low, as the asset is diminished.
Premium payable will increase over time
The increase in premium is two-fold:
- In general terms, the greater number of years left on the lease, the cheaper the amount payable to extend it.
- As house prices rise in the future, the premium rate would subsequently increase as well
No more ground rent charge
Once the extension is complete, the annual ground rent charge will revert to £0.00 for the remainder of the term.
For more about a lease extension and on the fees involved, please Email: [email protected]
See our full list of admin fees (PDF, 215KB).
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What are the criteria and am I eligible?
An application can be made either through the statutory route or the voluntary route (depending on circumstances). The difference between the two is:
Statutory lease extensions
You must be 100% leaseholder.
Voluntary lease extensions
You can be either:
- 100% leaseholder who has owned the property for less than two years or
- A shared owner
For either route, the following conditions must also be met:
- There must be an initial lease term of over 21 years
- No existing breaches of lease
- All conditions under the head-lease can be met (i.e. where Hyde are not the freeholder)
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What factors affect the premium?
Value of property
Hyde will instruct an independent valuer to provide us with a valuation of the property.
Remaining term of lease
The shorter the term remaining, the higher the premium is likely to be. This is particularly significant in the final 80 years due to the ‘marriage value’ (see below).
Marriage value
The ‘marriage value’ charges you for the increase in property value caused by extending the lease.
For leases with less than 80 years left to run, the premium for extending the lease will include 50% of the marriage value. For leases with more than 80 years left to run, the marriage value is taken to be £0.
Potential loss of ground rent
Following the lease extension, the ground rent will revert to £0.00. The premium payable may take into account a range of valuation factors. Please seek independent valuation advice, regarding the likely premium in each individual case
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What fees/costs would I be liable for?
Statutory
Voluntary
Premium
As per agreed valuation
As per Hyde valuation
Hyde administration fee
£225
£225
Hyde solicitors fee
£1,200
£1,200
Hyde valuation fee
£350-£600
£540
Your solicitor fee
Resident to arrange
Resident to arrange
Your valuation fee
Resident to arrange
N/A
Stamp duty*
Dependent on value of extension
Dependent on value of extension
The costs shown are indicative only and may be amended. Additional legal, valuation, Land Registry, disbursement and other third-party costs may apply depending on the circumstances of the transaction. Please obtain independent advice regarding likely costs before proceeding.
All stated costs include VAT (20%).
*Stamp Duty Land Tax (SDLT) may be payable depending on the premium and the tax legislation in force at the time of completion. Please seek independent tax advice where appropriate.
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Who should I contact to discuss this further?
To discuss further, you can contact Hyde’s Home Ownership Team:
- Freephone: 0800 328 2282
- Email: [email protected]
- Post: The Hyde Group, The Home Ownership Team, 30 Park Street, London, SE1 9EQ.
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How can I obtain independent advice?
- You can obtain independent legal advice from the Citizens Advice Bureau, a housing advice centre or a firm of solicitors.
- The Leasehold Advisory Service is an independent, government backed organisation that can provide further information on lease extensions and other matters. You will also be able to get an indication of the premium payable by using their lease extension calculator. Their website can be found at lease-advice.org.
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Guides to lease extension
- Guide to Statutory Lease Extension 2019/20 (PDF, 229KB)
- Guide to Voluntary Lease Extension 2019/20 (PDF, 293KB)
- How do I apply for a voluntary lease extension?
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How do I apply for a statutory lease extension?
To apply for a statutory lease extension you will need to contact a solicitor who will advise you on the process and provide you with the relevant documents for your application.