Leasehold extension requires payment of fees that range from the solicitor’s fees to the actual cost of the extension. The cost can be broken down into solicitors fees, lease valuers fees, the cost of doing research and the premium for a lease extension.
Leaseholder’s solicitor plays a crucial role in making leasehold extension a success. Solicitors advise their clients on possible ways of extending leases and also help in documenting and researching lease extension.
Informal Leasehold Extension:
An informal lease extension is when a leaseholder and his landlord agree on terms of extension by themselves without involving the law. The landlord does not get a notice of lease extension. Statutory laws of lease extension such as the 90 year extension period, zero ground rent and others are not necessarily adhered to. Informal lease extension can be cheap at face value. Unscrupulous freeholders tend to hide subtle clauses in the agreement that will turn out to be even more expensive to the leaseholder. This is why it is important to have a solicitor help you scrutinize the lease for any hidden detrimental clauses.
Formal Lease Extension:
Formal lease extension follows statutory laws of extending contracts.The leaseholder has to send a notice of lease extension to the landlord. Every negotiation is carried out within the confines of the law. A landlord can not reject duly served notice without proper grounds. Reasons for rejecting lease extension include breach of current contract by the leaseholder. Formal lease extensions are usually more expensive than informal ones because they require the involvement of many parties. A solicitor can help you estimate the cost of either method of conveyance. A leaseholder must pay conveyance fees to both his solicitor and his landlord’s solicitor.
The most common cause of conflict is the freeholder’s failure to respond to the notice of lease extension. Each solicitor’s fee is usually around ₤1,500.
The major cost of lease extension is the premium. For a lease extension, a leaseholder must pay a premium to the landlord. If the landlord rejects notice for a lease extension, the leasehold can apply for a hearing in a tribunal.