There are two main reasons why leaseholders delay lease extension on their property – a belief that it’s not urgent, and a belief that it’s too expensive to consider. Although this is understandable, to a degree, it’s a mistaken conception that can have some serious financial consequences in the long run. Every day you ignore your leasehold extension literally costs you money.
An Extended Lease Will Help You Sell Your Flat
The first thing to understand is that your lease term is a major factor in the saleability, and therefore the value, of your home. The longer the lease term, the more secure a proposition it is for potential buyers. Mortgage companies like a good long lease term, too. Indeed, many stipulate a minimum number of years on the lease beyond the end of the mortgage term before they agree to lend. Apart from a minority of urban property hotspots, short term residential leasehold properties are notoriously difficult to sell.
How An Extended Lease Protects Your Investment
Even if you didn’t buy your property with a view to sale, you still need to protect your investment. Lease terms of 99 or even 125 years are not as long as you think. A large part of that may have already expired by the time you buy your property, and every day that passes shortens the lease still further. One trap for the unwary is the “marriage value”. This will significantly increase the cost in extending your lease if and when you decide to extend. As soon as the remaining term falls below 80 years, you become liable for this lump sum payment to your landlord, which is based on a notional 50/50 split of an improved sale price. This is a hypothetical sale – you don’t actually get your 50%! With this in mind, the deadline for UK lease extension is suddenly much closer.
The best way to protect your investment and to save yourself money in the long run is to apply to extend your leasehold interest. The law grants you a general right to do this, provided you’ve owned your property for at least 2 years. Individual exceptions may also apply, so ask your solicitor to check this out for you. However, the majority of people will be able to add another 90 years to their lease, in addition to the remaining term of the original lease, at a nominal or peppercorn rent. With the right professional assistance, the process of extending a lease is straightforward and cost-effective. Specialist lease extension solicitors will handle all the paperwork on your behalf, provide you with the right lease extension advice and negotiate with the landlord for you to achieve an equitable outcome.
The need for residential tenants to extend leases is both more urgent and easier than you might believe. It takes the pressure off, saves you money and guarantees your investment in your home, so take action before any more time slips away!
Do yourself a favour – don’t ignore your extended lease – call us now
If you’re thinking about extending the lease on a flat – for specialist advice just contact our lease extension and collective enfranchisement team for a FREE initial phone consultation
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