If you own a flat on a lease with fewer than 90 years still to run, now is a good time to get your lease extended.
People often delay applying for a lease extension until they want to sell. With the current lull in the property market, flat-owners may not see the point of paying for an extension for the time being. But now would be a good time to apply, and could save you money in the long run.
With the property market in its present state now could be the cheapest time to extend your lease.
The amount you will have to pay your freeholder depends on the length of the unexpired term – the shorter this is, the more you have to pay. If your lease has more than 80 years unexpired you will not have to pay any ‘marriage value’ [see below] to the freeholder.
Buyers won’t look at properties with less than 70 years on the lease
Most high-street mortgage lenders require 70 years minimum unexpired when lending on leasehold properties. So if your lease is currently shorter than this, extending it now will make it easier and quicker to sell when the time comes.
Buyers are often understandably reluctant to buy leasehold property even if the lease has more than 70 years still to run. It is possible for a seller to serve a statutory lease extension notice and assign it to the buyer on completion (so that the buyer can claim an extension) but this still leaves the buyer with the worry and expense of pursuing the claim.
Lease extensions aren’t completed overnight
It can take some time for the terms of an extended lease to be settled, even if the freeholder is reasonably co-operative. In the rare cases where there are problems – a missing freeholder or one who will not agree a reasonable premium – it can take a lot longer if it is necessary to apply to a leasehold valuation tribunal.
And when the terms have been settled a new lease document has to be drawn up and registered at the land registry, which can take some weeks to complete.
So if you wait until you want to sell your flat, you will find that you then have further delay while all this is done.
It is much quicker and easier to sell a flat if the buyer can see that the lease has already been extended – and you can ask more for the property.
Find out now how much you could expect to pay for a lease extension – try the Fridaysmove Lease Extension Premium Calculator or phone us on 0800 038 6446 – Fridaysmove can help with all aspects of lease extension, including arranging a professional valuation and a Solicitor
Marriage value as defined in the Leasehold Reform, Housing and Urban Development Act 1993 – Schedule 13
4(1) The marriage value is the amount referred to in sub-paragraph (2), and the landlord’s share of the marriage value is 50 per cent. of that amount.
(2) the marriage value is the difference between the following amounts, namely—
(a) the aggregate of—
(i) the value of the interest of the tenant under his existing lease,
(ii) the value of the landlord’s interest in the tenant’s flat prior to the grant of the new lease, and
(iii) the values prior to the grant of that lease of all intermediate leasehold interests (if any); and
(b) the aggregate of—
(i) the value of the interest to be held by the tenant under the new lease,
(ii) the value of the landlord’s interest in the tenant’s flat once the new lease is granted, and
(iii) the values of all intermediate leasehold interests (if any) once that lease is granted.