Freehold purchase and leasehold extension solicitors

The key difference between freehold and leasehold is ownership.

Freehold means you own both the property and the land it is built on outright, with no time limit. You are therefore fully responsible for maintaining the building and the land, and you do not pay ground rent or deal with a landlord.

Leasehold means you own the property for a set period of time, but not the land it is built on, as that belongs to the freeholder (also known as the landlord). Leases can range from a few decades to 999 years. As a leaseholder, you may need to pay ground rent, service charges, and may need to get permission for certain changes.

When the lease runs out, ownership of the property usually returns to the freeholder, unless you pay to extend the lease.

The cost of extending a lease or buying the freehold varies depending on various factors, such as the property's value, the remaining lease term, and whether you are extending the lease individually or collectively purchasing the freehold with other leaseholders.

For lease extensions, if your lease has less than 80 years remaining, the cost will be higher as it will include an additional charge called the "marriage value." The premium payable to the freeholder is based on a formal valuation, and additional costs that include solicitor fees, surveyor fees, and in rare cases, tribunal costs if negotiations are disputed.

For freehold purchases, the cost depends on the number of hopeful leaseholders, the ground rent terms, and the building's value. Additional costs such as valuation fees, legal fees, and potential costs if the matter goes to a tribunal may also apply.

Yes you may need to pay Stamp Duty Land Tax SDLT when you extend your lease if the consideration i.e. the premium is over a certain amount which will depend on your circumstances. We will be able to advise you whether or not your extension will attract an SDLT payment.

When you extend your lease, there are several key obligations as a leaseholder:

1. Pay the 'premium' – You will need to pay a lump sum (known as a premium) to the freeholder for the lease extension. The amount depends on factors like the property value, the length of the remaining lease, and ground rent terms.
2. Legal and valuation costs – You are usually responsible for your own solicitor and surveyor fees, and in some cases, you will also need to cover the freeholder’s reasonable legal and valuation costs.
3. New lease terms – Once extended, your lease may come with updated terms, it is important to check this carefully to ensure you adhere to them.
4. Usual leaseholder responsibilities – After extending your lease you will still need to adhere to your standard duties as a leaseholder, such as paying service charges, contributing to maintenance, and following the terms of the lease.

Yes, you can still sell your leasehold property at the same time as applying for a lease extension or freehold purchase.

If you are going through the formal (statutory) process, you can transfer the benefit of your application to the buyer. This means they can continue the process after completion, and it can actually make your property more attractive to potential buyers, especially if your lease is running low.

It is important to work with a solicitor who is experienced in this area, as the legal paperwork needs to be handled correctly to ensure the buyer takes over your rights.

Extending a lease involves a number of legal and procedural steps, and it's important to approach it correctly to avoid delays or unnecessary costs.

If you've owned your leasehold property for at least two years, you may qualify to extend your lease under the Leasehold Reform Act 1993.

The formal process for lease extension begins with obtaining a professional valuation to estimate the premium payable to the freeholder. A section 42 notice is then served which sets out your proposed terms. The freeholder is legally required to respond, and both parties then enter into negotiations. Once terms are agreed, solicitors for both sides draft and complete the new lease, and the updated lease is registered with the Land Registry.

Alternatively, leaseholders may negotiate an extension directly with the freeholder through an informal route, though this does not offer the same statutory protections.