Successful Lease Extension - What Every Leaseholder Needs To Do
A lease extension is often the last thing on a leaseholders mind. It involves thinking about the future and with many other stressful everyday things to think about it is often pushed to back of the mind. However, this article is meant to make you stop and think, not extending your lease could be a very expensive. How long you have on your lease effects how easily your home can be sold. Extending your lease does not have to be complex or time consuming, please read on to find out how.
1. Check your existing lease
How much longer does your present lease have to run? Remember, short leases seriously affect the value of a property, unless you're lucky enough to live in an urban property hot-spot. More to the point, most buyers are reluctant to buy a property with a short lease, and most mortgage companies are reluctant to lend against them. Even if you are not thinking of selling soon, you should still think about the future and looking after your investment by extending your lease. If the remaining lease term is approaching 80 years, then you need to act fast (see point 2).
2. Weigh up the costs
Extending a lease naturally requires some initial outlay, so you'll need to balance short term expenditure against long term security and financial gain from resale. The danger time for a lease is around 80 years. When the term dips below 80 years you will become liable to pay 'marriage value' when extending your lease. This is essentially a 50/50 split with the landlord of a notional increase in the property's value - an increase that you have to pay up front, even though it hasn't actually happened yet. This makes the whole thing much more expensive, so the lesson is - extend your lease before it dips below 80 years!
3. Turn it over to a professional
This is really an essential part of your strategy. Working out the value of a lease extension is virtually impossible for the uninitiated, since it involves balancing up a number of factors, such as local property prices and the loss of the landlord's ground rents. As such, you'll need to appoint a professional valuer, usually a surveyor. You will need to find and instruct a specialist solicitor. A solicitor who is experienced in lease extension will make things much easier for you, as they'll handle all the documentation, liaise with the landlord, and conveyance the new lease.
Although extending your lease might take a small amount of effort, if you follow this strategy you will reap the rewards in the end.