Delaying leasehold extension can have serious financial consequences, but it’s an issue that all too many homeowners find easy to ignore. If you’ve been putting off a decision about whether to extend a lease, you’re probably suffering from one or more of the following “mental blocks”.
1. It’s Not Urgent
Standard lease terms are usually 99 or 125 years, sufficiently far in the future for it to seem like somebody else’s problem. However, unless you’re fortunate enough to pick up a brand new lease, a considerable part of that term may have already elapsed. You also need to consider the fact that lease extension becomes much more expensive once the original term falls below 80 years. At this point, you become liable for the “marriage value”, a 50% premium on the increased value of your property that you have to pay to the landlord up front. With this in mind, the time to apply for a lease extension without incurring hefty costs can be as little as 19 years – a length of time that can elapse surprisingly quickly.
2. It’s Too Expensive
Extending your leasehold certainly involves costs. The freeholder needs to be compensated for their diminished interest in the property, and the loss of ground rents, and you will need to pay valuers’ and solicitors’ fees too. However, these costs are really a one-off investment that will safeguard your financial stake in your own home and give you peace of mind for years to come.
The real question to ask is “can I afford not to buy an extended lease?” A property with a short or declining lease is a very unattractive prospect on the open market. Buyers are reluctant to buy and mortgage companies are reluctant to lend, leaving you with a seriously devalued property. You also jeopardise your own position, since you run the risk of becoming a tenant in your own home if the lease expires with you still in residence.
3. It’s Too Difficult
Extending a lease on a flat is a legal process, and as such, it’s best left to those who understand that process. You can make things much easier for yourself by engaging the services of the professionals from the start. You will need to get a specialist lease extension valuation from a valuer, usually a surveyor, and a specialist lease extension solicitor will be able to advise you, serve the relevant paperwork and negotiate with the landlord on your behalf. Bear in mind that most surveyors and solicitors rarely, if ever, deal with lease extensions – so it’s crucial to get the right lease extension advice from specialist professionals.
These mental blocks about a UK lease extension may be common, but they’re always a serious mistake. By paying attention to the issue now, you can save yourself a lot of money and inconvenience in the future if you extend your lease.
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