subject: The Importance Of Extending A Lease [print this page] The Importance Of Extending A Lease The Importance Of Extending A Lease
It can be an extremely costly mistake for a leaseholder not to take advantage of a lease extension. It is a common misconception that extending a lease is a laborious and difficult process. Due to this, many people ignore the idea of extending and this is a big mistake.The principles of leasehold extensions are, in fact, very straightforward. Leaseholders in England & Wales have a statutory right to extend their lease - or more precisely, the right to get a further lease of 90 years as well as your current term. The process involves serving notice on the landlord or freeholder, and obtaining a valuation for the new lease term.Irrelevant of what costs are incurred this is eventually for the benefit of the leaseholder. A short lease can seriously jeopardise the financial investment that any property represents. Situated outside of property hotspots short term leases are extremely difficult to sell due to their lack of value. Mortgage companies are also notoriously unwilling to lend against them, usually insisting on a minimum lease term of at least 30 years beyond the end of the mortgage.Although the financial aspect is obviously important, there are less tangible but equally compelling reasons for extending a lease - a sense of security and control over your own property. Anyone remaining in a property when the lease expires becomes a tenant of the freeholder, a much less advantageous position.All of this means that lease extension is something that should be looked at sooner rather than later. Adding to the time pressure is the so-called "marriage value" - a premium that's paid to the landlord to reflect a putative increase in the property's value once its lease term has been extended. The will clearly make the process cost more. However, this only really kicks in once your lease has less than 80 years left to run, so if you act quickly you will be ok.Leasehold extensions can be quite complicated, this is largely because a valuation is made up from variable factors, examples of these are local property prices, as well as length of notice periods. However, this shouldn't be a problem for most people, since it's something that can be safely turned over to professionals. A valuer or surveyor will help to determine the final cost of the extension, and a specialist solicitor will attend to the paperwork.In the end, weighing up the time and costs involved against the long term benefits will usually come down in favour of extending a lease at the earliest opportunity.
