Many of our leaseholder clients do not think too much about the term of their lease until they find out they have a problem. This can happen either when trying to sell their flat, or perhaps when re-mortgaging.
Some mortgage lenders will not lend on leases with less than 70 years remaining, whilst some are more flexible and will lend down to 60 years. Below that level, most lenders will refuse to lend. This means you cannot remortgage, and it means the potential market for your property is restricted to cash buyers – this can affect the sale price you achieve.
The key points to consider are as follows:
1. Valuation advice
It’s best to speak to a surveyor with experience in this field at an early stage. We work closely with a local surveyor who can provide immediate valuation advice. This advice will help formulate an idea as to the likely price you will be paying for your lease extension.
2. Statutory or negotiated lease extension
You might have already approached your freeholder to ask for a lease extension, or perhaps your freeholder has approached you. Either way, the “negotiated lease extension” they might be offering might not be as good value as a “statutory lease extension”. Take a look at our page on Lease Extensions for more information.
3. Budgetary considerations
The lease extension premium itself will not be the only cost. As well as your legal and surveyor costs, you will normally also be required to discharge the freeholder’s legal and valuation costs. If you are following the statutory lease extension route, these costs must be reasonable and can be challenged. If it is a negotiated extension, you will usually be informed of these costs at the start. Finally, you will need to pay some relatively minor Land Registry fees. Save for the most expensive lease extensions, where the existing term is very short and/or the property is very valuable, you will not need to pay Stamp Duty Land Tax.
If you want help getting started with your lease extension, contact us now and we’ll guide you through the next steps.