By Daniel Winslow, Partner & Head of Leasehold Services
If you are reading this then it is very likely that you are thinking about extending the term of your residential lease and are wondering when the key date to start worrying about it is. The simple answer to that is now.
When your lease was originally granted it would have likely been on a long lease term such as 99 years or 125 years. As time has gone by the length of your lease will have decreased and with that the value of your property (subject to market variations). The longer the term decreases, the larger the decrease in value and perhaps more importantly, the more you will need to pay by way of a premium when you look to extend. Carrying out a lease extension as early as possible will therefore future proof the value of your property and ensure that you pay as little as possible by way of a premium.
Notwithstanding the above and for the dare devils out there, the minimum deadline for extending a long residential lease has generally been when it has got close to having 80 years remaining. The 80 year rule comes about due to what is known as the marriage value of a lease and is effectively a penalty calculation that is applied to the value of the premium when the figures are worked out. Of course, it is not fatal if you own a lease that has a length that is already below 80 years, but it could mean you paying more than you would have had you extended before the 80 year deadline. Again, that figure increases as the term continues to decrease.
Aside from the value, there are other commercial considerations to take into account when deciding whether to extend and that is saleability. Some mortgage lenders have changed their requirements with regards to what length of lease they will lend on and this will generally coincide with the legal requirement (the 80 year rule) and in some cases can be even higher (i.e. 90 years or more). Therefore, if you have a lease length that is within this bracket then it makes sense to carry out a lease extension without delay to ensure not only the value of your flat, but its marketability down the line.
Please contact our expert team of solicitors to assist. We have over 10 years of specialist experience dealing in this field and can provide valuable advice and guidance on the processes.
Healys Leasehold solicitors can advise and assist you with leasehold enfranchisement services. If you require any further information, please don’t hesitate to contact Healys Leasehold services team.