Posted in Property
When it comes to leasehold property advice, a question we are often asked is – when is the best time to extend a property lease and how should you go about it?
We advise that if your flat has a lengthy lease with between 70 and 90 years you should possibly apply for an extension, simply because without one you may have more issues selling or getting a mortgage.
When a landlord grants a lease it is for a fixed number of years, but once the years have completely elapsed the lease ends with the property going back to the landlord.
As the term gets shorter, the lease loses value and the cost of any extension gets more expensive.
Being leasehold property experts in London, one of the most sought after cities in the world, we can say undoubtedly that a short lease can also be more difficult to sell on as many buyers are hesitant if a lease has less than 85 or so years to run.
It’s worth adding that since the credit crunch, mortgage companies are also becoming more hesitant about their lending and will often not lend on properties with less than 65 years left on the lease.
So, we at Pindoria Solicitors would advise that if your lease has between 70 – 90 years left to run you need to consider a lease extension and be aware that the cost of extending your lease will be far more if the years left on the lease drop below 80.
You need to talk to the landlord about whether he/she is willing to offer you a lower premium for the lease extension in exchange for a higher or increasing ground rent for the remainder of the extended term.
A lot of thought has to go into the decision – working out whether this is a good deal and expert surveyor’s advice should always be taken as increasing ground rent may have an impact on any future plans to purchase the freehold or extend the lease again.
Of course, your landlord may be unwilling and there is a way to force him to grant you a lease extension with what we call a statutory lease extension.
You must have owned your flat on a long lease for at least 2 years and own it outright. For instance, shared ownership, which has become increasingly popular, won’t work.
If you qualify for a statutory lease extension, then you will be entitled to a lease extension on the following terms:
• A fresh lease with a term of 90 years added to the unexpired term of years on your existing lease (i.e. if you have 83 years left on your lease then the new lease will be for 173 years)
• A peppercorn (i.e. nil) ground rent
• All other terms of the new lease are to be identical to the existing lease save only for necessary modernisation.
If this is food for thought, then you really need to appoint a specialist leasehold solicitor who will be able to help you negotiate the complicated legal work required, and as well as a valuation of how much it is likely to cost you to extend your lease.
Property is a complex and highly stressful issue and the matter of lease extensions in London and elsewhere in the capital is a pressing matter for many. Ensuring your leasehold is there to best serve you in the long term is certainly one of the big decisions. It should not be procrastinated on.
A quick chat with Pindoria Solicitors expert property team will ensure the matter is tackled as easily as possible. If you have any questions about leases or other property matters, you can read more or contact us today on 020 8951 6959 we are happy to help.