It is easy to see why extending a lease is not at the forefront of most people's minds. Many leases are granted for 99 to 125 years and therefore an extension can often seem pointless.
However, this is a serious mistake. If you live in a flat or other leasehold property, the length of the lease is something that affects you right now, not decades into the future. In fact there are 3 major reasons why you should be looking to extending that lease now rather than later.
1. Short leases affect the value of your property
Although there are no hard and fast rules, a property on a short lease will almost certainly be worth less than a property that has more years left to run on the leasehold. This is just common sense. Although there are exceptions, as a general rule, the value of your property will be closer to the freehold value the closer you are to the maximum lease limit.
2. Short leases affect the saleability of your property
If you had two identical properties to choose from, which would you choose? One that you could live in safely and securely for as long as you reasonably wished ? Or one that required time, money and effort to stop it reverting back to the freeholder? Hopefully the answer will be obvious! It stands to reason that potential buyers are very disinclined to purchase properties with a short lease.
One thing to consider is that outside of the City many mortgage lenders are extremely reluctant to lend money on a property with a short lease. In most circumstances they will set a minimum length for the lease, normally it is around 30 years from the end of the mortgage. So even if a buyer wants to buy your property, they may be unable to do so, leaving you with a devalued property that you can't sell - a property that is effectively worth nothing at all.
3. Short leases are less beneficial in the future!
As if the above reasons weren't compelling enough, if your leasehold term has dipped below 80 years, you become liable for the so-called "marriage value" - a figure that's calculated by deducting the value of the property before the extension from the value afterwards, plus the landlord's interest. Every day you delay applying for an extension brings you closer to that 80 years deadline, and the more it will cost you when you finally do get around to extending your lease.
So there are three very good practical and economic reasons for extending a lease as soon as you possibly can. Although the process may seem daunting, it doesn't have to be. A solicitor specializing in the complex area of extending a lease can handle the legal side of lease extensions for you, from preparing the application to serving notices on the freeholder. Of course, this will cost money, but it's an investment that will more than repay you in terms of property value, saleability and above all, peace of mind.