Lease Extension – Tips and Key Facts
The most common form of flat ownership in England is leasehold. If you hold a lease on a flat you are essentially renting it for a certain amount of time and while you have the right to live there, you do not own the actual building. It’s an easy form of ownership, and works well for many homeowners. However, a commonly asked question is whether or not to extend a lease (Lease Extension), and that is what we are going to look at here.
To legally extend a lease you must have owned the flat that you leasehold for at least two years, if you have owned it for a shorter amount of time then sadly you will have to wait. If you qualify to extend your lease it is often well worth it as extending a shorter lease to a longer once can often add thousands of pounds to your property’s value, which is great news if you decide to sell later one.
Lease Extensions – What to look out for
Before you extend a lease be sure to check how long you have left. If you have under 60 years it’s going to be nearly impossible to re-mortgage, under 70 years will give you a slight increase in mortgage rates at best, and if you have more than 90 years remaining it may be worth waiting a little while as the price increase will likely only be a little more than your actual costs.
You can also use a Lease Extension Calculator to work out an estimate of the Premium. The process itself can take anywhere between 2-6 months to complete and therefore it is always advisable to have as much information to hand, prior to instructing a solicitor to carry out the legal work.
The best time to extend a lease is when you have between 81 and 79 years remaining as you will get the best increase in value and those who buy your property will not be entitled to extend for another two years.
If you want to extend a short lease (less than 60 years remaining) then it will likely not be worth it. Often when it comes to extending a lease like this it will cost you tens of thousands to do so, and so it is often the case that by the time you have purchased the extension you will have spent far more than the added value to your house. If you’re looking to extend a lease and it is less than 60 years then the best advice would be to seek professional legal advice so that you can not only weigh up the costs but any potential pros and cons to the extension.
If you are definitely looking to extend a lease then don’t forget about the added costs that come with the process. You have to remember the legal fees, which includes the freeholder’s valuation and costs, as well as the valuation fees from the surveyor, and the stamp duty that often creeps up on those with a flat that has been valued at over £125,000. In addition, remember to start the process of extending a lease early as it can take a very long time to go from finding a solicitor to applying to the tribunal.
Just remember the key points when it comes to extending a lease: start looking into it early (between 81 and 79 years), keep the costs in mind, be sure that you start the process of application as early as possible, and above all be patient with the process.
Why not contact one of our friendly advisors today to find out how we can help you with your Lease Extension?