What is a leasehold property?

If you buy a property on a leasehold basis, you are buying the right to live in a house or flat for a certain number of years. After the lease has expired, the property reverts to the building owner (the freeholder) unless the lease can be extended.

Both houses and flats can be leasehold, but leasehold houses are much rarer, and new laws passed in 2024 mean that the sale of new leasehold houses is to be banned (barring exceptional circumstances).

When buying a leasehold property, the key thing to understand is how many years are left on the lease. If there are less than 80 years to go, it can be difficult to secure mortgage finance to purchase it. It is also important to understand what other costs, such as ground rent and service charges, you will be legally responsible for.

Why extend a lease?

Lease extension is necessary because the fewer the years left on the lease, the lower the value of a leasehold property becomes. A property with fewer than 80 years to go on the lease will become difficult to sell or remortgage. However, the law currently gives leaseholders the right to extend their lease for a standard term of 90 years.

Our comprehensive lease extension service

If you’re considering extending your lease, then it’s very important to get legal advice from specialists with extensive experience and familiarity with local landlords and management companies. You’ll also need professional help from a surveyor who regularly values leases, in order to establish a realistic ‘premium’ to purchase the extra years you need.

Due to the niche expertise that lease extension requires, our lease enfranchisement specialists work separately to our Residential Property team, ensuring they can focus all their attention on achieving the best results for leaseholders. We understand that leaseholders can feel daunted by the process, which is why we assign all our clients one solicitor, who will stay with them from start to finish, keeping them updated throughout. To help our clients manage their costs, we establish our fees at the outset and work to keep costs down at all times, as we understand that extending a lease can be expensive.

We can assist leaseholders with:

• Advice on how to proceed with a lease extension
• Negotiating with the freeholder to get the legal process underway
• Getting their lease valued
• Agreeing and completing all the formalities surrounding the execution of the new lease.

We also advise and assist clients who wish to purchase the collective freehold, whether individually or as a group of tenants. To find out more, please visit our page on collective enfranchisement here.

Proposed changes to the leasehold system

In January 2021, the Secretary of State for Housing, Robert Jenrick, announced that leasehold reform was imminent and would be achieved through two pieces of legislation. The first, The Leasehold Reform (Ground Rent) Act 2022, came into force on 30 June 2022 (1 April 2023 for retirement homes) and abolished ground rent for all residential leases granted on or after 30 June 2022.

The second (and much more extensive) piece of legislation, The Leasehold and Freehold Reform Act, became law on 24 May 2024 and is designed to make it easier and cheaper for leaseholders to extend their lease, purchase their freehold and provide greater transparency over service charges.

The changes to the law include: :

• Reform the valuation process used to calculate the cost of extending a lease/purchasing the freehold to make it fairer to leaseholders
• Abolish the ‘marriage value’ (this is an increase to the amount paid to the freeholder when extending a lease with less than 80 years outstanding)
• Give leaseholders the right to extend their lease for a term of 990 years.

Despite the legislation being the biggest reform of the law in this area for many decades, the changes in the legislation do not come into effect immediately and we will need to await further regulations being implemented by the government to confirm the dates on when those changes will take effect. Our team is dedicated and passionate about keeping a close eye on this.

Given the above it is important that each scenario is assessed on a case-by-case basis and we are able to provide advice that is tailored to the circumstances of your property and taking into account the recent changes in the law.

Get in touch

To see what our lease enfranchisement experts can do for you, please contact us on 0203 871 0039 or email leasehold@attwaters.co.uk.