London estate agency Douglas & Gordon were recently quoted in the Metro newspaper as having a significant proportion of properties on their books with less than 80 years to run. According to their records up to 40 per cent of properties for sale under £500, 000 have less than 80 years on their leases.
This should come as no surprise. I have recently read a government report which indicates that there are over two million leasehold properties in the UK with an estimated 20 per cent of them having less than 80 years remaining and therefore requiring a lease extension.
As Douglas & Gordon quite rightly point out, the problem with a lease of less than 80 years is that many lenders will not lend on such properties. In fact, over the past few months lenders have changed their policies to taking a more risk adverse approach to short leases stipulating an increase in the minimum number of years they require.
Such is the concern amongst mortgage brokers, conveyancers and leaseholders about the moving of the goalposts by lenders that a new site is about to launch highlighting, in real time, lender’s requirements concerning minimum lease terms.
In a more positive note, there is no better time to acquire a lease extension than now. With many economic experts predicting an upward turn in the property market, exercising a statutory right for a lease extension would make great economic sense even if you are not thinking of imminently selling your property.
For those leaseholders who currently have a property on the market or about to put a property on the market, they should give serious consideration as to increasing the marketability of their property by at least getting the lease extension ball rolling. Fridays’ fee for serving notice on the landlord and obtaining a calculation for the lease extension (prepared by a chartered surveyor) starts from just £300 plus VAT. This is approximately one-third of the costs of going to a separate chartered surveyor and a law firm to reach the same stage.
Most leaseholders fear that the matter is likely to go to Court or a leasehold valuation tribunal. It is worth bearing in mind that most lease extension experts believe that less than 5 per cent of cases end up at the leasehold valuation tribunal. Lease extension negotiations are normally amicable and can be helped by the right conveyancing and lease extension experts.
For more information, please contact our Lease Extension Team.