In the UK surprisingly few leasehold property owners are aware that they have a statutory right in applying for a lease extension of the home. In addition, many people delay exercising their right, even though there are significant advantages if you extend your lease – and significant disadvantages in not doing so! When it comes to UK leasehold extension there are three common misconceptions, or “deadly sins”, that prevent people from taking timely action.
1. UK Lease Extension -The Expense
There is a general perception that extending a lease costs a lot of money. After all, you do need to compensate the freeholder for loss of ground rents and their reduced interest in the property, and you need to pay a solicitor and a professional valuer as well. If money is tight, there’s an understandable reluctance to avoid paying out yet more money on your property.
However, UK lease extension is one of those areas in life where spending less today can end up costing you more tomorrow. The value of your home is inversely proportional to the length of your lease. In other words, the shorter the remaining lease term, the less your property is worth. This is because most buyers, and most mortgage lenders too, tend to steer clear of short leases, seeing them as an unacceptable risk. Since your future financial wellbeing and security is tied up with the value of your property, even if you don’t intend to sell, it makes sense to get as long a lease as you possibly can – which is where extending the lease on a flat comes in.
2. UK Lease Extension – The Effort
Anything that involves following a legal process is bound to be regarded as time consuming and difficult. Moreover, the value in extending your leasehold involves a complicated calculation based on local property prices and how they’re likely to move in the future, together with the value of the lost ground rents and the landlord’s diminished interest. The whole question of how to extend a lease is obviously beyond the expertise of most lay people.
Fortunately there’s a simple answer – turn it over to the professionals! A valuer or surveyor will work out how much it will cost to extend your lease, and a specialist solicitor will follow the correct procedures to bring the lease extension application to a successful conclusion.
3. UK Lease Extension – The Urgency
Most leases are granted for 99 or 125 years, which can make it seem as if you have plenty of time left to consider the matter. However, time is always ticking away! You could already be quite a way through your original lease term by the time you get around to applying for an extension. This is made even more urgent when the “marriage value” is taken into account. This is a premium that gets paid to the landlord when you apply for an extension, calculated as 50% of an increase in the property’s value once it’s granted a longer lease. It makes the whole process much more expensive.
Luckily, the “marriage value” can be avoided, provided you apply for an extended lease before your lease term dips below 80 years. This means that the time slot for a cheaper, less complicated lease extension is just 35 years, or even 19 years. Many properties built in the 1980s and 1990s were granted 99 year leases, so the issue is becoming very urgent indeed for the owners of those properties.
In the end, lease extension doesn’t have to be prohibitively expensive or costly, provided you avoid committing these deadly sins, and take prompt action to secure your future.
Thinking of a UK Lease Extension? Contact our experts today
For UK Lease Extensions Advice you can rely on with regard to freehold purchase or extending leases – contact one of our leasehold extension or leasehold enfranchisement solicitors for a FREE first phone consultation
- Call us today on 0800 1404544, or
- Fill out the enquiry form below.
Comments or questions are welcome.