subject: Extending a Lease - How Does it Work? [print this page] Extending a Lease - How Does it Work? Extending a Lease - How Does it Work?
The leasehold method of property purchase originated in England and almost all flats in England and Wales follow this system. So many people can't be wrong but what exactly are we talking about when referring to a leasehold property? So why extend a lease?One of the primary characteristics of a leasehold property is that as the leaseholder you should be able to remain in the property for a designated number of years - typically 99 or 125 when first granted. However, the freeholder retains ownership and responsibility for the common parts of the building. The property will then revert back into the landlord's ownership when the lease finishes.If you are buying an existing lease, look for one with over 80 years left to expire. Other than this, it is a good idea to extend your lease before that number decreases. This is because a short lease means your property will be worth less. Further options when your lease comes to an end are; purchasing the freehold from the owner or continue renting as a tenant.Think about what the terms of the agreement will be before you sign? Make sure you keep a copy of your lease agreement - or leasehold extension agreement - because it details both the duties owed and rights owned of the landlord and leaseholder.Those terms will normally state who is responsible for looking after different parts of the building and insures it. It may restrict how the property may be used - for example, business activities may be forbidden. It may also state what transactions require the landlord's permission, such as selling the property.In this document you will also find that you are required to pay ground rent and a regular service charge. The ground rent will cover your right to occupy the space your flat sits on and the service charges will be used for the whole maintenance of the common areas within the building. When you come to extend a lease, the same rules apply.But what do you do if you are not satisfied with the term? Then you can vary them by agreement. What if you feel the need to challenge any of the clauses or if they aren't met by the freeholder? You also have the right to apply to a Leasehold Valuation Tribunal (LVT) on specific grounds to vary your lease or to report the negligence.Once you understand how the leasehold system works, it is advisable to get the advice of a solicitor with specialist knowledge of leasehold laws and how to extend a lease. With confidence, you can purchase the flat of your dreams.
