When is the right time?
Do you own a long lease residential flat?
Do you wonder when is the right time to extend your lease?
There may not seem to be any urgency in extending your lease and of course there are going to be costs involved.
So when is the right time?
As each year passes your lease gets shorter and this means that the premium that you will have to pay to extend your lease will increase year on year.
Rising property prices
One of the factors affecting the premium you will need to pay to your freeholder to extend your lease is the value of your property. As the value of your flat increases, so does the premium you will need to pay your freeholder for the lease extension.
The 80-year rule and ‘marriage value’
Once the length of your lease drops below 80 years the freeholder is entitled to charge an additional premium known as the ‘marriage value’. This additional premium can be substantial and can be avoided if you extend your lease before the term drops below 80 years.
Prevent problems if you want to sell your property
A short lease can cause problems when you try to sell your property. Many people only find out that they have a problem with selling a property with a short lease, when they actually come to put their property on the market.
Most mortgage companies won’t lend on properties with short leases and many buyers are put off of a property with a short lease. Banks and building societies differ in their lending criteria.
Some draw the line at 75 years remaining on the lease; others may be happy with anything over 70 years. Below 60 years, it may be difficult to get a mortgage at all. If you have plans to sell you should consider the length of your lease and take action quickly so as not to hold up a sale.
For an initial no obligation consultation please contact Gemma Cook on (01983) 527878 or email [email protected] who will be able to discuss your options with you.