Extend or Change a Lease
Buying a leasehold property means you are investing in the right to live in the property for a set time period – rather than in the property itself forever. As your lease gets shorter, leasehold property starts to steadily lose value.
Once the unexpired part of your leasehold dips below 85 years, you should really think about extending your lease. In particular the price of the leasehold extension is likely to increase significantly once you have less than 80 years left to run. If the unexpired part of your lease therefore is nearing just 80 years and you are interested in extending your lease, our advice is to act swiftly and contact us straight away.
If the remaining lease term is shorter than that, extending a lease is something that you should deal with sooner rather than later. The reason for this is that once a lease drops below 70 years owners can experience difficulty in selling their property as the shorter lease term can have the effect of making flats un-mortgageable and increasingly hard to sell.
Mortgage lenders have brought in more and more strict requirements about the minimum length of a lease that they will consider lending on – and many refuse to lend even if as many as 70 years remain on the lease.
Once a lease has dropped just one single day below 80 years, the premium payable to the freeholder rises sharply, because your freeholder is then entitled to charge an additional premium – called the marriage value. The overall premium continues to rise dramatically as your lease gets shorter.
So by acting now in extending your lease, you are likely to save yourself a significant amount of money.