Early attention to leasehold detail saves time and money in the long run
If you own a leasehold property there are several good reasons to consider extending the terms of your lease. In essence, as the length of the remaining lease term decreases so does the value of the lease itself — and this has consequences. For example, if you plan to raise a mortgage on the property or you are planning to sell, you or your potential buyer may encounter difficulties borrowing against a property whose lease has less than 55 years left to run. Banks and mortgage companies often look for lease terms of at least 30 years plus the life of the proposed mortgage, while some lenders insist on a lease of at least 70 years’ duration.
Take early action if possible: if your lease has 80 years or more remaining, you will not be called upon to pay a landlord’s fee, sometimes called the ‘marriage value’, when you seek an extension.
As a leaseholder you have legal rights that may qualify you to take statutory action if you have owned your flat for at least two years. If your application is successful you are likely to be granted a further 90 years plus the remainder of the term of the current lease.
In order to apply for a lease extension you must inform the landlord of your intention by serving notice. Expert professional advice is key at this stage to ensure the notice is worded correctly and that it contains the required information specific to your situation.
In some circumstances it is possible, if you are planning to sell the property, to transfer the right to seek a lease extension to the new buyer. Not only does this make your property a more attractive purchase option but it also allows a buyer to circumvent the rule that otherwise requires them to wait two years before seeking a lease extension.
As an alternative to the statutory procedure, leasehold property owners can approach their landlord directly in order to agree an informal lease extension. Provided you have taken professional advice concerning the premium payable and can agree a mutually acceptable figure with your landlord, this method has several advantages over the statutory procedure: it is usually quicker and often less expensive in terms of legal and survey costs.General, George Ide, News, Residential Property Conveyancing