It is well known in the property market that flats and apartments with long leases are more attractive to potential buyers. If you are considering moving on from your leasehold property, a lease extension may be a worthwhile option to make your home saleable. But when is a good time to extend the term of your lease? Brady Solicitors’ Head of property transactions and expert conveyancing solicitor, Lesley Brentnall, shares her thoughts…
Firstly, it’s worth pointing out that most leaseholders who have held their property for at least two years have the right to apply for a lease extension at any time without the agreement or support of fellow leaseholders in their block.
Secondly, you can apply to extend your lease in one of two ways – either through the statutory route, where you can obtain a further 90 years on the lease term and any ground rent payable will effectively be reduced to zero, known as “peppercorn rent”; or through a mutual agreement with your landlord. Either way you’ll need legal guidance as to the best option for you.
The 80 year rule
Generally speaking, the shorter the term you have left on your lease, the more expensive it will be to extend it. If your lease has less than 80 years to run, the price payable to extend it jumps considerably. We would always recommend, therefore, that you apply for a lease extension before you reach the critical 80 year mark.
How much does a lease extension cost?
The price of a lease extension varies from property to property. If you are following the statutory route there is a formula for calculating the price which is based on the value of the property at the time the notice is served. Though, this formula may also be used as a basic figure for an informal lease extension; you would agree the price in this scenario in the same way you would agree any open market deal. It’s important to note however that even with the statutory route the usual proviso regarding valuations is that they can vary – three valuers might even come up with three different figures!
Timing it right
As property prices have fallen in recent years and are now, seemingly on the increase, it may well be financially worthwhile considering an application to extend your lease sooner rather than later. Even if you are not thinking of selling for some time, a lease extension now could prove to be a sensible move as the premium will be calculated on the current value of your property and the longer lease will allow you to achieve a better sale price when you do decide to move on.
Are you thinking of extending your lease?
If you think now could be the right time for you to extend your lease, we’d be pleased to talk you through your options. Contact our lease extension specialists by email or call 0115 985 3450.