Getting an extension on your lease is only relevant to those people who live in a leasehold property i.e. where you rent from a freeholder landlord. If you are a freeholder (as most properties in the UK are) then you do not need to know about lease extension.
It is when you own a leasehold property [or at least one where lease was originally granted for at least 21 years] that the issue of an extended lease should be of some concern to you.
The word ‘concern’ was not used above lightly, either! It is always important to ensure that you have as long left to run on your lease as possible. Many, probably most, leases originally commence with a 99 year term [although 125 years is not unusual these days]. If you do decide to apply to extend a lease, it’s always sensible to do before the remaining term drops below 80 years. Why? Once the remaining lease term drops below the 80 years mark, any application for an extended lease will involve additional costs payable for the landlord [known as the “marriage value”].
Once you have owned your leasehold property for a period of over two years [and provided you meet the remaining criteria such as the original minimum 21 year term], you are then entitled to apply for a lease extension. At such a time, it is important for you to get in contact with a firm of solicitors who specialise in lease extensions. It’s a tricky area of law and very few solicitors come across lease extensions more than once in a blue moon. If you are looking to extend a lease, you need to be aware of the fact that there are many tricky procedures and timescales that need to be kept to in order to successfully qualify for your extended lease.
As your lease get shorter, and especially when there are less than 60 years left to run on your lease, you may well encounter difficulties in the future if and when you look to sell the property. Increasingly, many banks and building societies are introducing stricter rules when it comes to offering mortgages for borrowers on leasehold properties. Few mortgage companies will be prepared to lend on a property with less than say 55 or 60 years to run.
Lease extension costs will be lower the longer you have left to run on the lease. This is because you will have to pay less to compensate the landlord for their losses when they agree to extend a lease. Don’t put off your extended lease application if you are aware that the remaining term on your lease is due to fall below 80 years very soon. As we have already stated above, the cost of lease extension will simply end up costing you far more in the long run.
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