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How many years are there left to run of your Lease ?
The value of your flat will decline as the term (i.e. length) of the Lease reduces and can become a real problem once the remaining term falls below 70 years. You may find that potential purchasers are put off by properties with a Lease term of less than 70 years and some mortgage companies will not lend on such properties.
How can you extend your Lease ?
If you have owned your flat for over two years then in most cases you will qualify under the Leasehold Reform Housing and Urban Development Act 1993 (as amended) to obtain by right an additional term of 90 years at a peppercorn rent (rent free).
We can advise you and assist in the process required to obtain a Lease extension by this statutory route. The process starts with the service of a Notice by you on the Landlord which includes an offer of the premium to be paid. Before the Notice is served it is essential that you have obtained all the advice and information needed to make the application. We can advise you on checking your eligibility to obtain the statutory extension to your Lease, completing the Notice as well as assisting on appointing a valuer who can advise on the
amount of the premium you should offer to the Landlord in the Notice and can give you a “best and worse” case valuation before you start the process.
How much will it cost ?
There is a formula for calculating the premium payable to the Landlord for the extension of the Lease which a valuer can advise on before you start the extension process. While a Lease is still over 80 years in length it would be cheaper to obtain a Lease extension because once a Lease falls below the 80 year threshhold an extra value is added to the premium called a “marriage value” which is the increase in value attributable to the “marrying” of the Freehold and Leasehold interest. It is even more important to act quickly when the Lease has fallen under 70 years because the premium increases as the Lease decreases. This means that the value of your Lease next year will be less than this year.
Voluntary Lease Extension :
It is worth contacting your Landlord to see if he would be willing to negotiate an extension to your Lease without following the statutory procedure, particularly if you may not qualify under the statutory route. We can advise on the terms offered by the Landlord and represent you in negotiations and in registering the new Lease at the Land Registry.
Opportunity to tidy up your Lease :
If you do decide to extend your Lease this is also is an ideal opportunity to sort out any
clauses in your Lease which are defective and which can cause problems with mortgage lenders should you decide to sell your flat or take out a mortgage over it. We would be happy to review your Lease generally and advise on any clauses which we think could cause problems should you come to sell or re-mortgage in the future.
Act Now :
You may have no current plans to sell your flat. However you should act now rather than later in obtaining an extension to your Lease. It can take some time to obtain the extension and is an added pressure on you if you are trying to obtain an extension from your Landlord at the same time as selling your flat. You can start the process of extending your Lease by serving the initial Notice on the Landlord and can assign i.e. pass on the right to extend the Lease to any buyer of your property.
If the term of your Lease is around 70 years or under, you should act immediately. If you have between 70 – 80 years left then you should also not delay in getting your Lease extended. Even if you have over 80 years left to run then it could be considerably cheaper for you to obtain an extension to your Lease now rather than leave it until later.
For further information about extending your Lease, or any advice on residential conveyancing matters, please contact Clare Dove at MacDonald Oates on 01730 268211 or email claredove@macdonaldoates.co.uk
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