If you own a property which has a lease with less than 80 years left to run then you should act quickly to extend your lease. Mortgage lenders are becoming stricter when it comes to lending on properties with less than 80 years left on the lease, which could limit your options when you come to sell or remortgage. The only way to address this is to extend your lease or buy the freehold.
Reasons to Extend Your Lease
- Avoid paying the “marriage value” of the property – this is an additional charge on top of the normal lease premium payable to your landlord, and is based on the additional value added to your property if the lease is extended. If the term of your lease drops below 80 years you may be liable to pay this additional cost;
- Removal of ground rent from lease – if you are concerned as to the ground rent you are currently paying, or the amount of ground rent payable is to be reviewed in the near future then extending your lease is recommended, as by law the ground rent will be reduced to a nominal peppercorn amount once the lease extension is completed;
- Increase the value of your property - a lease is in effect an agreement to own the property for a fixed period, so the lower the lease term, the lower its value. By extending the lease term (by 90 years as permitted by law) you will be adding value to your property;
- Improve the marketability of your property – if you are looking to sell in the near future then an extended lease could attract a wider range of buyers, as a lower term of lease term could restrict buyers who need to purchase with the aid of a mortgage. We could also carry out the lease extension work alongside your sale matter and transfer the paperwork to your buyer upon completion, so that you can sell your properly sooner.
If any of the points above apply to your circumstances, and you have owned your property for more than two years then you may be eligible to apply to your landlord to extend your lease. Rowlinsons Solicitors have extensive experience in dealing with lease extensions- we can prepare the necessary paperwork in this regard and negotiate with your landlord on your behalf.
If you wish to discuss whether you are eligible to extend your lease or need any further information as to the process of extending please call 01928 735 333 to speak to one of our leasehold specialists or click here.
For an indication of the possible cost of the premium for extending your lease we would recommend consulting the Leasehold Advisory Service’s Calculator at https://www.lease-advice.org/calculator/. Please note that any such costs are indicative, and we would strongly recommend that a professional valuer is instructed to advise as to the premium.