If you own a leasehold property you can have the legal right to extend the length of its term under existing legislation. However, it would be wise to investigate what is involved because failing to do so could be an expensive mistake. The process can also be confusing and potentially very stressful.
Every lease is finite and when it expires the property legally reverts to the Freeholder. However, as long as you have owned the property for more than two years you usually have a legal right to request a 90-year extension to its existing lease. The extension also removes the need to pay annual ground rent in most cases.
If you have owned the property for less than two years, you can still enter into a non-statutory agreement with the freeholder but this will be at the freeholder’s discretion. The same is true if the vendors from whom you purchased your property had already started the extension process.
Your first task is to consider whether extending the lease is your best option. As a general rule if your current lease is less than 90 years it is almost always a good idea because:
- Properties with shorter leases are worth less, particularly if there is less than 80 years left. If the lease expires ie goes to nil the property will legally revert to the freeholder.
- It is more difficult to get a mortgage for a property with a short lease because mortgage lenders worry about the decline in value
- Properties with shorter leases are usually more difficult to sell
However, there are some circumstances where extending the lease may not be the best option including:
- You intend to own the property for a couple of years before moving on
- The length of the lease is 90 years or more
- You are planning to buy the freehold
- Not enough money to meet the cost of extending
- You are unlikely to outlive your lease
Considering a lease extension?
If you want to know more, or are considering a lease extension or freehold purchase we are happy to help.