In England and Wales, we have influential laws that allow you to extend your lease for reasonable prices. To help you extend your lease, we have put together some tips:
What is a lease?
The most common form of owning a flat or apartment in England and Wales is by leasehold. A leasehold means that you are essentially renting the property for a certain amount of time.
Who can extend?
The majority of flat owners can extend their lease and are entitle to get 90 years added to the lease under the 1993 Leasehold Reform Act. You have to have owned the flat for at least two years before you can extend the lease. You don’t necessarily have to live in the property, but rather just have owned it for 2 years. Bear in mind however that prices can soar for short leases.
Should you extend?
One of the most valuable reasons to extend a lease is that by adding a decent length of time onto the lease, the value of the property will inevitably be boosted. When people decide to extend their lease, it is typically by 90 years. Make sure to check how long is left on your lease as anything below 60 years will be unmortgageable and will likely have to be sold at an auction.
If you have more than 90 years left on the lease, then the value added to the property if extending will only be a tiny bit more than the costs occurred. However if you have over 90 years remaining on the lease, then you shouldn’t really in any rush to extend the lease. If you get to the 83 year mark, then this is a time to start considering extending.
If the lease 80 years or less
A major factor to remember is that when a lease gets down to 80 years, the price of extending will be greater so try to extend the lease before this mark. You can not rely on the freeholder to notify you when the lease drops to 80 years as they will make money from this due to you having to pay 50% of the property’s ‘marriage value’. Remember to start consider extending the lease once it has hit the 83 year mark, or better yet… extend the lease at the 83 year mark. If you are looking for a property, then you should check how much time is remaining on the lease and question it if it is 80 years or below.
How much will it cost?
This all depends on the property’s value, the length left on the lease and ground rent. Remember that costs can vary dramatically, so you might be best to ask a solicitor which you can find on the Law Society website. Another option is to ask neighbours in your building how much it cost them to extend their lease and what was left on the lease.