The London property market is renowned for being fast paced, and for buyers wishing to settle in the capital purchasing a flat offers a great way to enjoy all that the city has to offer. However, whilst flats provide an affordable way to step onto the property ladder, in many cases buying and selling this particular property type comes with provisos.
The lease term associated with a flat may be a sticking point for both buyers and sellers as the value of the whole property is likely to decrease as the lease becomes shorter.
As a residential conveyancing solicitor for Greenwich, Healys assists with the buying and selling of all property types, including flats and apartments. Our expertise in obtaining lease extensions ensures both buyers and sellers can move on or move in to the property of their dreams.
The legislation behind lease extensions
Under the Leasehold Reform, Housing and Urban Development Act 1993, individuals can extend their lease by 90 years once they have resided in the property for at least two years. The remaining lease must however have at least 80 years left to ensure the 90 year extension plus the existing unexpired term can be negotiated.
Why should I extend my lease?
For both buyers and sellers, obtaining a lease extension to ensure the property has at least 90 years left to run is important. For sellers the length of the lease can have a major impact on the value of the property, as buyers will be unwilling or simply unable to purchase a property with a short lease.
If the lease has less than 80 years left then a ‘marriage value’ must be paid to the landlord – this can amount to a significant sum. In addition to this, those who wish to remortgage or buy a flat with a short lease may have difficulties obtaining the funds to do so from lenders as a flat with a short lease is deemed unmortgagable, especially if the lease term is shorter than 60 years.
There are, however, some scenarios where you will be unable to apply for a lease extension, for example:
- if the lease you hold is a business lease
- if the building is owned by a charitable trust
- if the building is located within the boundary of a cathedral
- if the building is owned by the Crown
- if the building is built on land owned by the National Trust.
How to extend a lease
If you are considering selling a short-leasehold property then it is worth considering applying for a lease extension to ensure you get the value you deserve for the property.
The process begins by serving a Section 42 Notice to your landlord. This Notice is essentially a request to extend the lease and should be completed with the help of an experienced residential conveyancing solicitor for Greenwich, such as Healys. With the Notice you must provide an up-to-date valuation of the property.
Please note that obtaining a lease extension can take several months, it can also come at a cost, particularly if the lease is less than 70 years. You will also be liable for paying the landlord’s legal fees, whether the extension is granted or not.
Buying a property with a short lease
Many buyers who have found their dream flat find that extending the lease after purchase is a viable option. When searching for a leasehold property it is recommended that you opt for flats that have at least 83 years of unexpired lease to ensure you have enough leverage to extend the lease.
For buyers in particular extending the lease after purchase, and waiting two years to do so, is a great way to get a discount on a premium rate flat. For example, a four-bedroom property recently being sold by Savills in Belgravia had a value of £2 million yet by extending the lease at a cost of £1.2 million, the property would be worth an estimated £3.5 million.
Experienced residential conveyancing solicitors for buyers in Greenwich
Whether you would like to extend your lease to sell or wish to buy a property and extend the lease to profit from your purchase, Healys can help with the legal administration of an extension.
Based in the heart of the City of London, our residential conveyancing team can help you buy or sell a flat in any area of the capital, including Greenwhich.
Call our London house sales solicitors today and we will be happy to discuss your lease extension circumstances so that you may move forward with confidence.