New free online lease search tool available for leaseholders

The government-funded Leasehold Advisory Service has launched a new Lease Search Tool that checks the length of a lease and estimates the costs of extending it.

This is important information for both leaseholders and those considering the purchase of a leasehold flat or house.

When the term remaining on a lease falls below around 70 years, lenders may decline to lend on the property. Each lender has its own rules, but these often state that they will only lend where a lease has the mortgage term plus a set number of years remaining.

Once the term left on a lease falls below 80 years, it can cost considerably more to extend it as there is currently an additional premium, known as ‘marriage value,’ which is incurred at the 80-year mark. While this is set to be abolished, the legislation to do so has not yet been passed.

New search tool to help property owners and buyers

The Leasehold Advisory Service has combined its lease length checker with its lease extension calculator to make a new single tool intended to help those with an interest in a leasehold flat or house.

It is intended to help leaseholders understand their position and take action when necessary to extend their lease. If a lease is allowed to run down too far, it could prevent a remortgage or sale from taking place.

Kion Ahadi, Chief Executive of the Leasehold Advisory Service, explained: “Our new tool gives leaseholders a simple way to understand where they stand. By bringing together lease length information, estimated extension costs and practical guidance in one place, we’re making it easier for people to make informed decisions about their home.

“Many leaseholders are unaware of the importance of their lease length until they come to sell, remortgage or consider extending their lease.”

How do you extend your lease?

Most owners of leasehold property have the right to extend their lease. There is a formal process which can be followed, which involves giving notice to the landlord, also referred to as the freeholder.

The first step is generally to instruct a specialist leasehold valuer to calculate the premium to be paid to the landlord. This is a complex calculation, and a surveyor specialising in leasehold valuations needs to be used.

An offer is made to the landlord, and they may accept this or choose to try to negotiate. Where a premium cannot be agreed upon, an application is made to the First-tier Tribunal (Property Chamber), a specialist Court that deals with this type of leasehold dispute.

The new lease tool may provide a rough calculation of the premium, but it will not be a bespoke valuation, which would need to take into account the local market value, the property’s ground rent and other issues. For this reason, the figure provided cannot be used when making an offer to the landlord using the formal route.

There is an option to agree a lease extension informally with a landlord; however, they are not obligated to complete, and there is a risk they could pull out partway through the transaction if the formal procedure is not used.

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If you are thinking about extending your lease, or would like to speak with one of our leasehold enfranchisement experts, we are here to help. Contact us today for clear, specialist advice.