If you currently live in a leasehold property, you will appreciate the fact that you have a lease that is due to run for a predetermined number of years.
For example, many leases are granted for 99 years initially (though 125 years is also becoming common). However, unless you bought the original lease [and unless a lease extension has already been granted], the period left to run on the lease when you buy will inevitably be lower than this. In either event, once you start to gain an understanding of the way in which lease extension law works, you are likely to realise how imperative it is for you to consider a lease extension as soon as possible.
First and foremost, you need to have owned your current property for a period of more than two years before you can even begin to extend a lease. If you have owned your flat for a short period, it is still an excellent idea to gain a thorough knowledge of applicable lease extension law, so that you are ready to move as soon as you reach that crucial two year anniversary of ownership.
Next we need to discuss the length of time that you have left to run on the lease of your property. Hopefully we are looking at a period of time that is over 80 years. If the lease has a period remaining that is below 80 years, you will need to bear in mind that it will be more expensive to extend a lease. This is because in addition to usual legal fees required to extend a lease, another premium will become payable to the landlord and this is known as ‘the marriage value’.
You will also need to be aware of the fact that the fewer the number of years left to run on a lease, the more problems you can have when you look to sell your property. Crucially, with a shorter lease, many banks will have their reservations when it comes to offering a mortgage on such a property. Fact recently, a number of lenders have tightened their criteria for lending on leasehold property – in general requiring increasingly longer leases before they will consider agreeing to a mortgage.
It is virtually impossible to provide an exact price for the cost of your lease extension. There are so many parameters to take into consideration here: e.g. the cost of the property; the ground rent (also known as the ‘peppercorn rent’); and the date in which your occupancy commenced. This is where it becomes essential to ensure that you instruct an experienced and specialist lease extension solicitor in order to guide you through the minefield surrounding extending your lease. Rarely if ever, does the average property solicitor come across leasehold extensions – so it’s essential that you pick a specialist who we knows the field.