subject: Why You Should Think About Extending Your Lease Now [print this page] Although the current recession has led to a drop in property prices across the world, now might be the ideal moment for leaseholders of flats to consider extending that lease.
Many people do not realise that if they have owned a residential flat for two years on a long lease (such as a 99 year term), they are likely to qualify for the right to extend their lease by a further 90 years. Anyone wishing to improve the value and saleability of their flat, especially if they are thinking of selling it in the near future, should consider the following points:
1. Once the remaining term of the lease has dropped below the 90 year point, it's worth thinking about an extension. However, be warned that if the remaining term drops below 80 years, then the price of extending increases significantly.
2. Extending the term of your lease can make it much easier to sell. Currently buyers are often more concerned about the length of the lease and whether the block is well managed. In an uncertain housing market, mortgage lenders are also tightening lending criteria and may prove to be more reluctant to offer mortgages on flats with short leases. In addition purchasers are often willing to pay more for a longer lease.
3. Unless you can reach agreement with your landlord on the price of a lease extension, it often advisable to get a formal valuation from a specialist surveyor early on in the process. This can give you increased negotiating power and could also be used as evidence in any application to the Leasehold Valuation Tribunal that might arise if you and the landlord are unable to agree.
4. It doesn't cost much to extend a lease that has over 80 years left on it - and costs much less than if you were to wait until the lease falls to under 80 years. In addition to legal costs, tenants must pay compensation to the landlord for the loss that they will suffer as a result of a lease extension (i.e. the difference in the value of the flat before and after the 90 year lease extension was granted) along with the landlord's reasonable costs and any valuation expenses.
Furthermore, if you have concerns about the management of your block, whether the costs are too high or the standard of management is not satisfactory, you might want to think about taking the right to manage the block from your landlord.
If you're interested in learning more about how to extend your lease or taking the right to manage, make sure you contact a solicitor expert in lease extension cases.
