Lease extensions can unlock real benefit for leasehold property owners
Many experts agree that if you are the owner of leasehold property it can be a good idea to extend your lease – but why?
There are several reasons why looking to extend the lease on your property makes sense. For example, as the length of the remaining term decreases so does the value of your lease and, by implication, your property. Furthermore, if you are hoping for a mortgage or are planning to sell to a buyer who needs mortgage lending to fund their purchase, you or your potential buyer may have difficulties obtaining finance against the property unless the remaining lease has a term of at least 30 years plus the length of any proposed mortgage. Accordingly, many lenders will require a lease to have a remaining term of at least 55 years, although some lenders look for leases with upwards of 70 years left.
In order to qualify for a statutory lease extension you must have owned your property for at least two years; if your application is successful you will be granted an additional 90 years’ extension to your current lease.
In most cases it is a good idea to apply for a lease extension as early as possible. To get started you should serve your landlord a formal notice – a conveyancing expert will be able to assist you with issuing your notice and ensure the wording complies with the appropriate regulations.
If you are planning to sell your property and are concerned the term of your lease will discourage potential buyers, under certain circumstances it is possible to transfer to a buyer your right to seek a lease extension, allowing the new owner to take over your application without having to wait a further two-year qualifying period.
An alternative to the statutory procedure is to make an informal lease extension agreement with your landlord. Provided you have taken professional advice concerning a suitable premium and you agree with your landlord a mutually acceptable price to pay, this method has several advantages over the statutory procedure – not only is it likely to be quicker but it is usually less expensive in terms of legal fees and survey costs.
If you would like further information or advice on extending your property lease, email George Ide’s residential property conveyancing team at firstname.lastname@example.org or call 01243 786668 and ask for Nick Smith or Mike Berry.General, George Ide, News, Residential Property Conveyancing