A Leasehold property is a ‘wasting asset’ because the term of the Lease gradually reduces to zero from 99 or 125 years. Banks will not offer Mortgages against Leasehold properties with fewer than 70 years remaining, which means that properties with around 70 – 80 years remaining are more or less impossible to sell; no one wants to buy a flat that they cannot sell in a few years time.
Fortunately the Leasehold Reform Housing and Urban Development Act 1993 can compel Landlords to grant Leaseholders a Lease extension of 90 years in exchange for the payment of a premium. This process also has the added benefit of reducing the ground rent to zero, as well as increasing the value of your property.
Unfortunately, the area of law dictating this process is complex and open to manipulation by Landlords looking to extract the maximum premium possible, and on unfavourable terms, so it is vital that you take legal advice from an expert before speaking to your Landlord.
In particular you should:
- Speak to us if your Lease has fewer than 100 years
- Never allow your Lease to reduce past 81 years
- Speak to us before you buy a property with a short Lease
The longer you wait to extend your Lease the more expensive it will become.
For more information on Lease extensions and how we can help you, please contact our Residential Property Team on 01279 755777 or get in touch with Michael Stark, Partner in our Residential Property Department.