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Short lease? Dont put your head in the sand

Published: 24/09/2018

We often get family members coming in as their mums and dads are getting old and they are looking to get a value on the flat. Many are surprised to hear that instead of it being worth X it is worth less, a lot less. One example was the flat in Brook Green, W6, with a long lease would have been worth circa £500k. However, to extend it to over 100 years was going to cost circa £280k. The most important thing with leases, is be aware of the magic 80 years mark. It gets exponentially more expensive to extend once it falls beneath this level.

If you know anyone who has a lease underneath 100 years, just tell them to be aware as the figures to extend can get scary. The old saying of a stich in time saving nine is never more true. A really quick and easy way to check is on the link below. Simon Hanton our head of valuations writes a great article beneath the link.

How long is your lease?

As each and every year passes the value of a leasehold flat or house diminishes and it will become the more difficult, or even impossible to sell. By law, you have a right to buy the freehold of your house or extend the lease of a flat.  

Flat owners can purchase a further 90 years with the ground rent reduced to a peppercorn provided you have owned the flat for 2 years. The cost increases a little year by year but when it drops below 80 years, there will be a significant and substantial increase in the price payable to the landlord.

With that in mind it is clear that you should exercise your rights as soon as you are able. We all know well enough that buyers, especially first time buyers, are likely to have stretched themselves to the limit to buy the property they dream of but it makes sense to extend the lease at the earliest opportunity, especially if the eighty year mark is getting close since pitfalls and delays are possible and it would be a shame to miss the deadline as a result. An early request would be the safer option.

A lease extension may actually become a necessity as most mortgage lenders will decline to lend to on short leases.
If you are selling a flat on a short lease many buyers will be keen to avoid the two year wait for qualification and can get around this by having the seller serve notice on the landlord and then assign the benefit to the purchaser on completion. In considering taking this step you should be sure to take professional advice at the earliest opportunity since it is essentially to get the process just right. There are no second chances if the paperwork is defective.

I have been dealing with the extension of flat leases around West London and further afield since 1993 when Act was passed and gave leaseholders the right to extend. As a valuer I am well qualified to advise on the numbers and I am careful to work closely with a number of specialist solicitors who know their way around the trips and traps of this particular field of law.

Please get in touch and let me show how we can help you make the most of your investment in property.

Simon Hanton F.R.I.C.S.,
Registered Valuer
020 8222 9915
s.hanton@willmotts.com