If you own a lease, the term decreases over time. As your lease term gets shorter it can make your property harder to sell, you may find it more difficult to remortgage and it can decrease the resale value of your property. Once a lease has 80 years or less, many mortgage companies will not lend against them and we have noticed an increase in lenders requiring a minimum unexpired term of 85 years or more. Shared Owners do not have a statutory right to a lease extension (whereas Leaseholders do). 

However, LiveWest offer lease extensions on a voluntary basis to both Shared Owners and Leaseholders. The voluntary lease extension process mirrors the statutory process but is usually less expensive and there is no administration fee or deposit payable. 

As long as LiveWest are the freeholder, you can extend your lease by an additional 90 years. There is a premium payable to us for this. This premium goes up significantly for leases with a term of 80 years or less (due to ‘marriage value’) so it is worth considering whether you are able to extend your lease before this. 

If LiveWest are not the freeholder, you can still extend your lease, but the extended term cannot exceed the term of the relevant headlease. 

What is Marriage Value? 

Marriage value is the increase in the value of the property following the completion of the lease extension, reflecting the additional market value of the property. The value that is foregone by LiveWest on a lease extension is linked to the ability to sell a new lease (or for a house to sell the freehold) at the end of the lease term.  

Are diminishing lease terms a concern?

The concern with diminishing lease terms is outlined above, a shorter lease can lead to:

  • Making your property harder to sell.
  • You may find it more difficult to remortgage.
  • It can decrease the resale value of your property.

However, most shared owners have the ability to staircase to 100% and purchase the freehold (if they own a house) and the lease term is not an issue unless you want to sell or remortgage. We want Shared Owners and Leaseholders to be aware that currently, leases do cost more to extend if the remaining term is 80 years or less. 

Proposed Government reforms 

We also want Shared Owners and Leaseholders to be aware of potential changes to legislation around lease extensions which will be beneficial for leaseholders. The Leasehold and Freehold Reform Bill was introduced to the House of Commons on 27 November 2023 and includes proposals such as:

  • Make it cheaper and easier for current leasehold homeowners to extend their lease.
  • Increase the standard lease extension term from 90 years to 990 years for houses and flats.
  • The possibility of a proposed online calculator to provide a simpler way to value the cost of extending a lease. 

There is also a desire to remove marriage value. However, it is not clear whether marriage value will be abolished or replaced by a different calculation or a calculation which starts from a different threshold.

These are only proposals at this stage and until the reforms are scrutinised, there are still a lot of unanswered questions. For this reason, making any changes to the current voluntary lease extension process is not recommended until proposed reforms become law. 

Currently, the timescale for such reforms is unknown. We recommend that if you are considering extending your lease prior to this potential legislation becoming law, that you seek independent legal advice. LiveWest cannot give advice about when it may be best to extend your lease or whether it will be beneficial to wait for changes in legislation. 

Find out more

If you’d like to find out more, please view our lease extension overview here. Please contact us if you have any queries or you’d like to find out more: homeowner@livewest.co.uk.

Please note we are not able to confirm the premium payable for a lease extension as this is dependent on a formal valuation. You can, however, get an idea of how much it could be by using the calculator on the LEASE website.

Summary of costs

Item

Statutory extension

Voluntary extension

Premium

Subject to a valuation

Subject to a valuation

LiveWest administration fee

£0

£0

LiveWest solicitor fee

£1,500 to £2,000

£1,500 to £2,000

LiveWest valuation fee

£400 to £600

£400 to £600

Customer solicitor fee

Customer to arrange

Customer to arrange

Customer valuation fee

Customer to arrange

Not applicable

Following feedback from LiveWest’s Shared Ownership Virtual Panel (SOVP), we have waived our £300 administration fee.