Should I Extend My Lease?
If your leasehold is becoming short and you are unsure what to do you may want to extend your lease, however, this process can become costly with some people spending over £10,000 trying to extend their lease. Understanding your lease extension will allow you to spend the least amount of money and get the best outcome with your lease, this is why our solicitors have written an article explaining what a lease extension is and why it can benefit you.
What Does Extending The Lease Actually Mean?
Your current leasehold has a specific term or length (such as 80 years), and at the end of this timeframe your freeholder will gain ownership of your property, this is why you extend your lease agreement before it runs out so you can stay in your home for an allocated amount of years.
Why Should I Extend My Lease?
If you want to extend the time you can spend in your current home you must extend your current lease, before you start this process you must take in all the variables and decide if it is actually worth it, as having a lack of knowledge of your lease you can end up spending double the amount you were willing to spend. If your property’s lease is 90 years or below you should almost certainly be able to extend your lease, this is because:
- Properties with shorter leases are harder to sell.
- Properties with a shorter else can be harder to get a mortgage as these companies will worry that the value might decline.
- Properties with a shorter lease are found to be less valuable, this is particularly true for properties under 80 years.
Why Shouldn’t I Extend My Lease?
If you are unsure whether you should extend your lease you need to consider the factors which are included within it this is the hassle and the high legal costs of it, and because of this it may seem pointless to get involved in extending your lease. Some of the other reasons not to extend your lease can be:
- You have a long lease already (over 90 years), so there is probably little benefit to extending it (unless you want to get rid of the ground rent).
- If you are short on cash you may not be able to afford it, as a minimum lease extension as it will cost a few thousand pounds.
- You are only planning to be in the property a couple of years before moving on (unless you need to extend the lease to make it attractive to buyers).
- If you are unlikely to outlive the terms of the lease it is normal for the heirs to inherit the problem.
- If you are planning to buy the freehold in its entirety as it makes the idea of extending your lease redundant.
Who Is Allowed To Extend Their Lease?
To apply for a lease extension you need to have owned that specific property for two years, the registration date usually happens a few days to a few months after you complete the purchase of your property. However, you must be careful as if you add a partner or a friend to the title deeds later down the line, this two-year clock resets.
If you originally bought your property through shared ownership you won’t be able to apply for a lease extension until your ownership of the property is at 100% this is known as staircasing.
How Long Can I Extend The Lease On My House?
The length of your lease extension all relies on your freeholder’s choice, depending on your arrangement with your freeholder, it can either be a 5-year agreement or even 50 years. It is best to get advice from a legal expert as determining the best options for your lease can be complicated.
How Can I Extend The Lease On My Flat?
Under the 1993 Leasehold Reform Act, most flat-owners are legally entitled to get 90 years added to their lease at a fair market price. Remember, you’ll need to have been the registered owner of your property for at least two years to qualify, also:
- Extending the lease on your flat will reduce your ground rent to zero if you have any.
- There are no restrictions on how many times you can extend the lease on your flat.
When Should I Extend My Lease?
As the lease gets shorter, the cost of extending it gets more expensive at an exponential rate, for lease agreements which are shorter than 80 years, this is particularly true. If your lease is about 60 years old the price of the lease will increase by 1% of the property will increase each year, for example, if the property is worth £500,000, the bill for extending the lease will go up about £5,000 a year. This means that when the leasehold gets down to zero years as it reverts basck to the freeholder, so we recommend that if you want to extend your lease do it sooner rather than later.
How Much Does It Cost To Change My Lease?
There are several factors to account for when changing your lease agreement which will alter the price, this can be the lease length, the age of the house and the actual negotiation you have with your freeholder, beware as leasehold law is incredibly complicated and someone with no understanding of law it can get very complicated very quickly. We recommend contacting a solicitor to guide you through the process to help you avoid any unnecessary legal costs or any hidden legal fees put out by your freeholder. Another reason to contact an expert as each lease situation is bespoke to the owner making it hard to give advice to everyone’s situation.
Need Help Extending Your Lease Agreement?
Monarch Solicitors specialist lease extension solicitors provide a tailor-made approach to your needs and can help extend your lease. Please contact us by either calling 0330 127 8888 or emailing [email protected] for an initial consultation.
