Key Information About Extending A Lease

This article contains some key information about lease extensions and what steps you should take as a tenant before you extend your lease

. In the current housing market leasehold extensions have become more popular as tenants want to secure their interest in the property whilst the reversionary interest increases in price over time.

Under the Leasehold Reform Act (1993) a tenant is given the right to apply for a leasehold extension for up to 90 years on top of any unspent time remaining on the current lease.

In order to qualify to extend your lease you need to have owned a residential leasehold right for at least 2 years, but need not have been in occupation during this period. The original lease must have been granted for at least 21 years.

Extending your lease does become a more urgent decision if you have 85 years or less to run on the lease. Leases that run below 80 years gain a 'marriage value' premium on any extension. Marriage value is calculated by taking 50% of the valuation of the increase in the freehold interest after an extension is given. This figure is then paid across to the landlord as a premium one-off payment for the lease extension. If you extend your lease before it has 80 years left to run, then no marriage value is payable.

Leaving your lease until there is less than 40 years left to run makes a sale of the lease near impossible. Mortgage companies are reluctant to issue mortgages for leases which have less than 40 years left on them. Therefore if you extend your lease appropriately you will increase your own chances of selling the property.

'Things to do' before applying for a leasehold extension

Get a valuation of the lease. The valuation is linked to the amount of premium the landlord should be charging you for the extension. Having this information will help you achieve a fair price when negotiating with the landlord.

Try to find out who the 'compentent landlord' is, this is relevant if you are a sub-lessee. The definition of compentent landlord is the person who owns the freehold or granted the head lease. In some situations it may be head lesee which has the leasehold interest for a set period.

Check you have the support of your lender when considering extending a lease. As well as this, check your own finances to ensure that you can afford the legal and administrative costs of extending your lease. Be aware that you may require early access to 10% of the proposed premium before you can follow through with the extension.

Finally, when it comes to the technical aspects of lease extension, make sure you appoint surveyors and solicitors who are highly experienced in this complex area of law - remarkably few are.

by: Tim Bishop

POST COMMENT

How To Prevent Wallet Theft - Info Information Regarding Growing Bonsai Trees Pay Attention To Battery Information On Your Taskbar Shanghai enterprises seeking reinforcement victims question - Refractory Industry Growing Tomatoes Information Find Detailed Information On Registered Nurse Salary Hard Drives- All The Information Stored At One Place Shareholder Agreement Template (Part 6): Recitals | Background Information 411 Ca Reverse Lookup - Fast Way To Get The Info You Need 411 Look Up - Get The Information You Need Today 411 Lookup - Fastest Way To Get The Info You Need Basic Information On Pepper Mills Cat Information