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You should look to extend your lease because;
- Increases the value – As the length of your lease decreases, so will the property’s value
- Saleability – If you decide to sell your property, a longer lease is more marketable
- Easier to get a mortgage – It is easier to obtain a mortgage against a longer lease – most high street mortgage lenders will not lend on a property where the outstanding lease falls below 80 years
- Cost of extending – When the outstanding lease falls below 80 years, the cost of extending also increases significantly, and an additional fee known as ‘marriage value’ becomes payable
When should the lease be extended?
A lease can be extended at any time, but we would always advise leaseholders to consider doing so when their lease term is approaching the 85 year mark, if not before. However, it is strongly advisable to do so before the term falls below 80 years, for the reasons outlined above.
How do I extend my lease?
There are two methods to extending your lease. They are;
The informal method: This is a lease extension by way of an ‘informal’ agreement between leaseholder and landlord, i.e. progressed outside the relevant legislation. If both parties can agree suitable terms, then this process could end up costing less and potentially complete more quickly than the statutory route.
The formal (statutory) method: If eligible to do so, a leaseholder can progress a lease extension under the Leasehold Reform, Housing and Urban Development Act 1993 by serving a statutory (section 42) notice on the landlord. Unlike with an informal extension, the landlord is compelled to grant the applicant leaseholder a lease extension provided the notice is valid and served correctly in line with the legislative requirements.
Legal costs for this method are typically higher due to the volume of complex legal work involved, and due to timescales imposed by the legislation, completion of a statutory lease extension can feasibly take at least 6 months.
What if your landlord doesn’t agree?
As a rule, though there are exceptions, with the statutory method, the tenant has a right to extend your lease by 90 years whether the landlord agrees or not, once they have owned your flat for two years. We can handle the whole process for you, call us on 020 8771 5254 to discuss your options.
How much will it cost?
There’s no set price to extending a lease, as it is valued based on the term of your lease. The shorter the lease, the higher the cost tends to be. Additional costs will be added for legal and valuation fees.
At Amphlett Lissimore, we understand that cost will be a concern. Therefore, we will give you a firm estimate of the costs involved at the outset so that you are fully aware of your position before you start the process. As part of our involvement in a lease extension, we not only assist in extending the lease, but we also apply specialist knowledge, expertise and experience to review the terms of the existing lease in their entirety. We advise on how the lease can be improved and updated to help comply with current mortgage lender requirements, to help avoid any issues selling the lease in future.