The Perfect Time to Extend Your Lease
This article was written by Tim Bishop – senior partner of Bonallack and Bishop, Wiltshire solicitors who specialise in lease extension for clients nationwide and who run the http://www.leaseextensionuk.co.uk and http://ww2.extendingalease.co.uk websites.
Take advantage of the fact that property prices are likely to increase to extend the lease on your flat. Property experts are in general agreement that flat or apartment prices, especially in London and the South, are expected to continue rising in the next few years, so act sooner rather than later.
Failing to extend your lease now could prove very expensive as you are otherwise being hit by a double whammy. Everyday the length of your lease gets shorter, which means having to pay more to extend your lease – and in the current economic climate, property prices are continuing to rise, which will also increase the price of your lease extension. So now really is the perfect time to extend that lease.
If you own a residential lease [ i.e. one which was granted with a term of 20 years or more originally, as distinct from weekly or monthly leases], you have the right to force your landlord to extend that lease by 90 years. You can also negotiate an informal lease extension with your landlord – but that does come with significant risks.
Image courtesy of Tuomas_Lehtinen at FreeDigitalPhotos.net
You don’t even have to live in the flat
Your right to a lease extension applies whether or not you have ever lived in the flat – so it’s perfect for buy to let landlords. However, with one or two exceptions, the right to lease extension only kicks in after you have owned the flat for two years.
7 Great Reasons To Extend Your Lease
- Buyers are more likely to buy a flat with a long lease, so it is a valuable marketing tool if you are thinking of selling and moving on.
- Every day that passes, your lease gets shorter, and decreases in value
- As property prices are expected to continue to rise in the future, setting the legal process in motion works in the leaseholder’s advantage because the valuation of the property for the extension is calculated as on the day when the Notice of Claim is delivered to the landlord.
- You have the legal right to extend your lease and your landlord has no choice but to go along with the legal process.
- If possible extend your lease while it still has more than 80 years left – because the day your lease drops below 80 years, the price goes up by thousands of pounds. This is down to something called the “Marriage Value” which allows your landlord to charge an additional premium on any lease extension on a lease with under 80 years left to run.
- If you are planning on selling your flat in the future, buyers are finding it increasingly difficult to get a mortgage on a flat with less than 70 years’ lease left, which dramatically limits your pool of potential buyers.
- The whole lease extension process was designed to encourage home ownership. So even after paying legal costs and a premium to your landlord for extending your lease, you’re almost certain to be significantly better off as the increase in the value of your flat will, almost always, significantly outweigh the costs incurred.
How The Process Works
Extending your lease is not something you should do without some expert legal advice. There are tight timetables and many traps for the unwary. Contact a specialist solicitor who can put you in touch with one of relatively few surveyors who regularly value lease extensions. Unless you want to pay more for your lease extension than you have to, start the process sooner rather than later.
If The Lease Runs Out
If your lease runs out completely, the legal situation changes and you no longer own the property and you cannot force your landlord to extend the lease – because it no longer exists. If your lease is on the point of expiring, it is absolutely essential that you make an appointment to see one of relatively few solicitors who specialises in lease extensions as soon as you can.