If you own one of the 3 million or more leasehold properties in England and Wales, then you should be giving some serious thought towards a leasehold extension. Extending your lease term can be a very sound investment in your future security and peace of mind, protecting your interest in your own home and safeguarding it against unnecessary devaluation. So how do you know if you qualify to extend a lease?
The good news is that most property owners are automatically granted this right under residential leasehold law. The Leasehold Reform Housing and Urban Development Act 1993 enables flat owners to extend their leases by 90 years, on top of the remaining term, at a peppercorn rent. The Leasehold Reform Act 1967 grants owners of leasehold houses a similar right.
Of course, there are exceptions to this general statutory right of lease extension. First of all, it only applies to property owners who were granted a long lease in the first place – anything over 21 years counts as a long lease. There is also an ownership qualification, in that you need to have owned your property for at least 2 years before you apply to extend your lease. You don’t need to have lived there, necessarily, but you do need to demonstrate that you’ve owned the property for that length of time. Finally, leases on houses can only be extended once, so if you own a leasehold house, you’ll need to check that your lease hasn’t already been extended in the past. Individual exceptions may also apply. If you lease your property from a charitable trust or the Crown, for example, you may not be able to apply for a lease extension.
Having established your eligibility, you should take advantage of your right to apply to extend your leasehold without delay. Every day you put off making a decision on extending the lease on a flat reduces your lease term still further. The shorter your lease, the more unattractive your property is to buyers and the less valuable it becomes. You also run the risk of becoming liable for the “marriage value” payment if your remaining lease term is less than 80 years. This is a premium that gets paid to the freeholder if you apply for an extension, making the whole process much more complicated and expensive.
Above all, an extended lease gives you the opportunity to ensure your future security. A long lease guarantees your right to live in your own home, without the pressure of falling property prices or the threat of the landlord reclaiming their interest.
Finally, don’t forget that you will need specialist advice – legal advice from lease extension lawyers and the preparation of a lease extension valuation by an expert surveyor. We can help with both.
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