When you are buying a leasehold property, it is important to check the length of the lease term. This is because the shorter the lease, the lower the market value of the leasehold property. When the remaining lease term nears 85 years, you should start thinking about extending the lease.
There are two ways to extend a lease and these are either informally (by agreement between the landlord and tenant) or formally via the statutory route.
If you are a leaseholder (or “tenant”) you may wish to approach the freeholder (or “landlord”) either directly or via the managing agent, to find out what premium they would accept for a lease extension, and their proposed terms, although they may charge you a valuation fee to find out this information.
Before commencing the statutory procedure, you will need to obtain your own valuation of the premium for a lease extension and we recommend you speak to a qualified surveyor. A surveyor will charge you a fee to provide a valuation.
If you have owned the leasehold title for more than 2 years, you are likely to have the right to extend the lease under the Leasehold Reform Housing and Urban Development Act 1993 (as amended). This right is asserted by following a specific statutory procedure and we can advise you on the procedure and the costs implications of instigating the process.
A statutory lease extension would give you an additional 90 years on the current balance of your lease and the ground rent is reduced to “peppercorn” (nil).
For a quote for advising you in connection with a lease extension, or just to discuss generally, please do not hesitate to contact us.