What if you’ve found the flat of your dreams but the lease term is short? Brady Solicitors’ leasehold property specialist, Lesley Brentnall, explains your options for protecting your interest.
If the lease has anything less than 85 years left to run, alarm bells should be ringing. This is because once a lease gets to less than 80 years, something called ‘marriage value’ comes into play, which makes extending it much more expensive. Leases which have less than 70 years remaining are generally not mortgagable, so care needs to be taken if this applies to the property you wish to purchase.
So, it’s important to get your lease reviewed by a professional before putting your property on the market.
Your options when faced with a short residential lease
There are various options to consider before making an offer on a flat with a short lease:
- You can ask the seller to make an application for a lease extension by serving the required Notice on the freeholder. The seller then assigns the benefit of the lease extension to you and you conclude the extension directly with the freeholder following completion. This speeds up the process, but you would need to obtain legal advice on the value of the extension and the other associated costs so that you could ensure this was taken into account in negotiations over the purchase price.
- You can ask the seller to extend the lease before they sell to you. This keeps all of the risk and the cost with them (although they will probably increase the price of the property to recover this). Whilst this could be regarded as the safe option, a lease extension can be a time consuming process, which can delay the purchase.
- You can purchase the property with the lease as it is and negotiate a reduction in the asking price to reflect this. You would then need to wait two years to make the application to extend the lease under the Leasehold Reform Housing and Urban Development Act 1993. It is possible, however, to make an informal approach to the freeholder for an extension, which means you don’t have to adhere to the two year period of ownership required by the statutory route. There is of course no guarantee that this would be agreed, but it may be worth a try!
Specialist leasehold conveyancing advice
If you are drawn to a property with a short lease you don’t necessarily have to avoid it – as long as you are well advised and negotiate the terms of the sale carefully.
Brady Solicitors’ leasehold conveyancing team has the expertise to guide you through the leasehold conveyancing process whilst ensuring that you are protected throughout. We have also been awarded the Conveyancing Quality Scheme accreditation – a mark of excellence for our conveyancing services, so you can rest assured you are in good hands with us.