Getting an extension on a lease is a positive move for most leaseholders as it can bring many different benefits. One quite important benefit that it should bring is that an extension will increase the value of the property if you were to sell.
It should be understood that if the lease has only a short period to run the price on the property will be depressed. Potential buyers prefer long leases, so by extending the lease there is a much better chance of the current owner making the sale. And it will be easier for the purchaser to secure a mortgage if the lease has longer to run.
For the past two decades leaseholders have had the right under the law to extend their leases. They can be extended by up to 90 years under the Leasehold Reform act of 1993, thereby allowing the leaseholder to up the value of the property while at the same time making it more saleable.
There are certain prerequisites to be met before the leaseholder is allowed to extend his lease. The original lease must have been for a minimum of 21 years, deeming it a long lease, and it should have been owned for more than two years. The latter point makes it impossible to buy a property on a long lease and then immediately seek a lease extension – unless you have made an arrangement for the vendors to make the application for lease extension prior to sale and then for him to transfer his rights to you.
There are occasions when the lease can be extended even if the original lease was for less than 21 years. This can be if the original lease had a “perpetual lease renewal” inserted, or if there is a “Prince of Wales” clause which terminates the lease upon death, marriage, or on an unknown date.
Having decided to extend the lease the leaseholder should consider getting legal assistance. This is because even though there is the right under law, providing certain stipulations are met, extending a lease is a potential legal minefield.
Within the legal profession there are specialists who deal with the whole subject of leasehold and lease extensions. Specialist lease extension solicitors have the professional knowledge and expertise to assist those wishing to extend their leases. An experience lease extension solicitor will be able to assist the leaseholder throughout the whole process. That will include conducting the crucial negotiations with the freeholder.
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