When you buy a leasehold property, you acquire ownership of that property for the number of years specified in your lease. Leasehold properties become less and less valuable as the length of the leases run down, and it can be extremely difficult to buy or sell a property with a short lease.
Many leases on flats built in the 1960s, 70s, 80s and 90s, were originally granted for a term of 99 years. They are therefore getting close to a critical stage in their lifespan.
If your lease has fewer than 70 years left to run, most mortgage lenders will refuse to lend against your flat (or less favourable terms will be offered). Your lease length is therefore likely to impact on any future sale or re-mortgage of your property.
Once the length of your remaining lease term drops below 80 years, the price payable for an extension dramatically increases as 50% of the ‘marriage value’ becomes payable to the landlord. Marriage value is the increase in value of your property once the extension is granted, and this can add several thousand pounds to the cost of your extension. It is therefore important to check the remaining term of your lease and take prompt action to minimise the sum payable for an extension.
How do I know how long my lease has left to run?
You can check the remaining term of your lease by obtaining a copy of your land register from the Land Registry. You can also refer to your lease document, although this may subsequently have been varied so this is not as reliable as the Land Registry’s record. Alternatively, contact us and we will be pleased to advise you.
What can I do?
The Leasehold Reform, Housing and Urban Development Act 1993 entitles you to an extension of 90 years in addition to your current, unexpired lease term (so a lease with 77 years to left to run, would end up with 167 years following the extension). You must offer a price to the landlord, who will then respond setting out the landlord’s proposed price and terms for the extension. The parties then negotiate to close the gap and a new lease is granted on the agreed terms.
The legislation governing lease extensions is notoriously complex to navigate, and the process is time sensitive. Any delay or error could cost you thousands of pounds, and result in you having to wait a further 12 months before restarting the process. It is therefore vital that expert advice is sought.
For further information or a free lease extension quote, contact Natalie Turner at Setfords – firstname.lastname@example.org