Common use of Final Steps Clause in Contracts

Final Steps. If you decide to go ahead, this is the point at which you’ll hire a solicitor and send us their details. We’ll instruct our own solicitors to work together with your solicitor to complete the lease extension. Unless you have a very good knowledge of leases, contracts and registering things at the land registry you’ll need a solicitor. Your mortgage company will also need to consent to the lease extension and your solicitor will deal with the mortgage company on this as well Costs How is the cost of the lease extension premium worked out? The law sets out a framework that is used to work out the premium. This is based on the number of years left on your lease and the current market value of your flat. It also takes into account ground rent. When do I pay the premium and other charges? You’ll pay the lease extension premium plus our solicitors’ fees of around £650 plus VAT at the end of the process however your solicitor may collect our solicitor fees earlier. You’ll also need to instruct your own solicitor and pay their costs as well. Because the extension needs to be registered at the land registry, it needs to be paid in full on completion and cannot be made in instalments. Why do I have to pay for the freeholders solicitor? The law says that the lessee must pay the freeholders professional costs, including the surveyor and solicitor. A lease extension is for your benefit therefore you will need to meet all the fees. What if I have arrears on my rent or service charge account? As with any legal completion, you will need to pay any money owed on your account before the lease extension can complete. If you have large arrears on your account, we may ask you to clear these before you can start the process, even if you have worked out a payment plan with your Property Manager Officer. If you have had made irregular payments over time that have resulted in arrears we will insist on a direct debit being set up with your Property Management Officer before you can compete. I’m a shared owner. Will I need to repay the remaining part of my premium if I ever staircase? No. The property will be valued with the longer lease and the price of the extra shares will be based on this price. FAQs about the lease extension process Do I need to extend my lease? You do not need to extend your lease and for many people this may not be financially an option however it is advisable to do so. If you’re a shared owner and own a house, your lease will usually entitle you to obtain the freehold on final staircasing. This means that provided final staircasing takes place before the lease expires, a lease extension should not be necessary. Please check your lease to ensure that you will acquire the freehold on final staircasing. I’m a shared owner, will my rent increase when I extend my lease? If your lease started before 1986, it is likely that you either pay community leasehold rent (that was set when you bought the property and hasn’t increased since) or fair rent (which is re assessed by the fair rent officer every 2 years). If you pay either of these types of rent, we will need to change it to a Leasehold Assure Rent (which is the type of rent that has been paid by all shared owners since 1986) during the extension. These are very old style rents which need to be modernised. We will not be able to proceed with a lease extension unless these are updated It is likely however that if your lease was granted before 1986, that you will also have the right to a new 99 year lease if you ever staircase to 100% ownership. This means that you may choose not to extend your lease if you ever plan to staircase. The only exception is if your lease has been varied in the past to add ‘staircasing provisions’ or a ‘mortgage protection clause’. You could check your documents or check with the solicitor who assisted you with the purchase of the property to find out if the lease has ever been varied. The land registry will also have a record of variations to your lease. If you think that you have one of these leases, you might want to contact us to have a chat about your options to ensure that you make the right decision. Do I pay ground rent after the lease extension has completed? No. Ground rent will not usually be charged after the lease extension. Not all lessee pay ground rent. If you are not sure if you pay ground rent, please check your lease or ask your property manager. If you currently pay ground rent, you will pay a proportion of this upfront as part of your premium and then you will pay no more ground rent. How long do I have to complete the lease extension? The surveyors valuation is valid for 3 months however we give you an extra 3 months in which to complete. If you’ve not completed within 6 months from the date on the valuation we cannot extend the deadline and we’ll require an updated valuation from the surveyor. This will cost £200 +VAT and it will give you a further 6 months in which to complete. Please note that the premium will have increase a bit since the last valuation however if the lease drops under 80 years in this time, the premium will increase considerably. Why is it important to consider a lease extension before the lease drops under 80 years? The framework that the law sets for establishing the cost of the premium calculates this differently after the lease drops under 80 years and the premium will be much higher. It will also increase at a steeper rate each year. The lower the amount of years on your lease, the higher the premium will be. Banks are hesitant to lend money to buy properties if the lease is under 80 years so they become more difficult to sell, and the sales price will also bereduced. Why haven’t Notting Hill Genesis told me that my lease was getting short? It is not the freeholders responsibility to monitor your lease length. It isthe responsibility of each leaseholder to carry out lease maintenance. We will always try to make the process as transparent and accessible for you as possible in order to facilitate this process Can I extend the lease by more than 90 years? The formula that the law sets out for establishing the cost of the lease extension assumes that the lease will be extended by a further 90 years so this is the only length that we grant extensions for. Can I extend my lease by less than 90 years? No. If your lease is under 80 years, the largest part of the premium is the part that brings your lease back to 80 years. A smaller extension would cost almost the same as a 90 year extension and mean that you would need to do another extension in a short amount of time. This would cost you more money in the long run. I’m a shared owner. Is a lease extension considered as a home improvement? A lease extension is lease maintenance which maintains the value of your asset. It is not a home improvement and cannot be used as one for the purposes of staircasing or resales. When you sell as a shared owner, you will benefit from the lease extension with the increase in value of your property.