As a knowledgeable audience, hoping to inform you in a neutral and general manner, it’s important to recognize that as a leaseholder, time is constantly running out. Nevertheless, you possess the authority to take action. Let’s delve deeper into this matter.
Leasehold properties, such as flats and certain houses, operate under a unique ownership structure. When you acquire a leasehold property, you obtain the right to reside in the property but not actual ownership of it. The ownership of the physical structure and any associated land lies with a separate entity referred to as the freeholder. It is important to note that your right to the property is contingent upon the lease’s duration. Once the lease expires, ownership of the property reverts back to the freeholder. It is advisable to seek guidance from a commercial property solicitor in Frimley to ensure a comprehensive understanding of the legal aspects involved in leasehold properties.
If you happen to be a knowledgeable leaseholder and find that the remaining time on your lease is diminishing, particularly if it falls below the 80-year mark, it can lead to various complications in the future. However, there is a solution to this predicament as it is feasible to elongate your lease and ensure the protection of your property investment. This article aims to provide valuable information on why it is advisable to promptly consider extending your lease rather than delaying it.
1 – Increasing the duration of the lease enhances the marketability of your property
Although you might currently be content with living in your leasehold property, it is important to consider that your preferences may change in the future. As a result, there may come a point when you decide to sell your property.
When your lease has less than 85-90 years remaining, potential buyers tend to be hesitant to make a purchase. Moreover, mortgage lenders are not keen on providing loans to buyers interested in properties with shorter lease terms. In fact, some lenders refuse to offer any financing for leases that have less than 75 years left. Consequently, the number of people interested in buying your property decreases.
2 – Increasing the duration of your lease enhances the property’s value
Since a shorter lease time may deter potential buyers from considering your property, you might find yourself compelled to accept a lower offer than your desired price when you decide to sell.
In contrast, a leasehold property that still has over 120 years remaining is considered a valuable asset, allowing you to assess your property’s worth accordingly.
3 – The Delay Increases the Expenses
The cost of extending your lease will increase The longer you delay. This may be due to the freeholder’s awareness of your urgent situation, allowing them to demand a higher price for resolving your issue.
Nevertheless, if you allow your lease to expire beyond 80 years without renewing it, the consequences become even more expensive. At this stage, the owner of the land has the right to demand a payment known as the ‘marriage value.’ In essence, this implies that when you extend your lease, you are obligated to pay 50% of the additional worth your property gains as a result of the lease extension to the landowner.
If you are nearing the significant milestone of 80 years mentioned in your lease agreement, it is imperative that you act promptly.
4 – Reasons Why You Should
Your freeholder is legally obligated to approve your lease extension request if you have owned the property for a minimum of two years. This is in accordance with statutory law, so you can be assured that your request cannot be rejected.
While you will still need to engage in price discussions with the landlord, ultimately, you will be able to reach a mutual agreement, even if it necessitates resorting to a tribunal for a final resolution.
5 – It’s Easy to do (with the right help)
Extending your lease is a straightforward procedure. As a tenant, you need to communicate with your landlord, obtain a property valuation, and engage in price negotiations that benefit both parties. Generally, the entire process of extending a lease can be completed within a period of 3 to 12 months.
It is crucial to have a knowledgeable property law solicitor by your side while arranging a lease extension. The process of extending a lease involves various legal aspects, including interacting with the Land Registry. In case you encounter any difficulties during the lease extension, such as the need to resolve pricing issues through a tribunal, having a competent solicitor supporting you will be incredibly valuable.