Extending the term of years left on your Lease
Why would you look to extend your lease?
As the length of the remaining term decreases so does the value of the lease. Further if you plan to have a mortgage on the property or you are planning to sell the property, you or the proposed buyer may have difficulties obtaining lending on the property unless there is at least 55 years left on the term i.e. 30 years plus the mortgage term. Some lenders will ask that there is at least 70 years on the left on the lease term.
In order to qualify under the statutory procedure, you must have owned the flat for 2 years to be able to applying if successful you will be granted a further 90 years plus the remainder of the term of the current lease.
It is best to increase you lease term early on as if the lease has 80 years or more then you will not have to pay a sum of money to the landlord when you seek the extension, this is called the marriage value.
You will need to serve a notice on the landlord, this notice must include certain information and we would suggest that you instruct an expert to assist you with this.
If you are planning to sell the property and you have concerns that the lease term will put off potential buyers it is possible that provided you have served a claim notice that you can transfer the right to seek the extension to the new buyer, this avoids the buyer having to wait 2 years before they can seek the extension.
An alternative to the statutory procedure is to simply agree an extension informally with your landlord. Provided you have taken professional advice concerning the premium payable and a figure can be agreed with your landlord this method has several advantages over using the statutory procedure mentioned above, being quicker and usually less expensive in terms of legal and survey costs.
At George Ide LLP our conveyancing team can help with such enquiries. If you would like us to provide you with a quote for a lease extension or if you require any further information on this matter please do not hesitate to make contact with us on 01243 786668 and ask for Nick Smith or Mike Berry
Nicholas Smith, Head of residential conveyanceGeorge Ide