Extending Your Lease.

24 February 2017

If you own a leasehold property on a long lease and are thinking of selling or mortgaging it, you need to check how long is left to run on the lease as it can affect the value of your property. Long leases are usually for 99 years or more. As the length of the lease decreases, so does the value of the property. As the value of the property starts to fall mortgage companies become increasingly cautious of lending against it. In addition it will become more difficult for you to sell the property, as potential purchasers will be put off by the short lease and the inability to obtain a mortgage. Once a lease has 80 years or less remaining the property may be considered to be falling in value. Once the term on a lease approaches 80 years a tenant should urgently consider obtaining advice from professionals on extending the lease to avoid a significantly increased premium being payable to the landlord for an extension. Under the Leasehold Reform, Housing and Urban Development Act 1993 most tenants can apply to extend their lease for a further 90 years and pay no ground rent for that 90 year period. The requirements are that: • The original term of the lease exceeded 21 years; • You have owned the flat for 2 or more years; and • You are not a business or commercial tenant. The Act also protects tenants from unscrupulous landlords who charge high premiums for extending the lease. The premium you pay is calculated under the legislation, so your landlord cannot pick out any figure he chooses. Making an application to extend your lease is a formal process which requires following specific procedures and the preparation of certain documents. To ensure a successful application it is recommended that you appoint a Valuer and a Solicitor. The Valuer will: • advise you as to the possible outcome of the negotiations • advise you on the amount of the offer to be made in the Notice • assist in the negotiation and settlement of the price and other terms of the lease. The Solicitor will: • prepare the information for the application • serve the Notice on the relevant landlords • respond to the landlord's Counter-Notice • respond to landlord's requests for information to support the claim • complete the conveyancing in connection with the new lease. For additional information please contact: Edward Worthy of Gepp & Sons. The above is not legal advice; it is intended to provide information of general interest about current legal issues.