Making Your Property Marketable With a Leasehold Extension

A lease extension made by virtue of the Leasehold Reform, Housing and Urban Development Act 1993 (as amended) can extend the original lease term by an additional 90 years. This makes the lease itself become more valuable to the buyer on the open market in comparison to a lease still operating on its dwindling original lease terms.

A buyer may find it difficult to source a mortgage for a property for which a lease extension has not been applied, unless the original lease still has in excess of 65-70 years to run. The same buyer in the UK will find almost no mortgage on offer for a property which has a lease with less than 50 years to run. After having been unwilling to offer mortgages on properties with leases with fewer than 50 years to run, many mortgage providers' required minimum lease duration qualification has in recent years risen to 70 years - a direction of travel that might be anticipated to continue.

Thus, a timely leasehold extension can be guaranteed to retain or increase the value of a residential property, make it saleable and provide the vendor with a market advantage over other vendors with properties that have dwindling leases and for which no leasehold extension has been applied. The lease can thus be seen to have a value linked to its remaining duration which in turn links to the overall value of the property.

The ideal time for applying for a lease extension is before the 80 years remaining point. Let the original lease's duration slip below that point and the property's market value will start to decline proportionally with the reducing duration of the lease. Should a lease holder miss out on obtaining a lease extension before the duration of the lease drops below 80 years, it would be wise to arrest the decline in the value of the lease and the property by obtaining the extension as soon after that point as possible. Made before the lease drops below 80 years, the application for the leasehold extension would not incur for the applicant the additional expense of having to pay the Marriage Value, a premium the landlord will charge if the lease has less than 80 years to run at the time a lease extension is granted.

Leaving the original lease to dwindle to a remaining duration of less than 70 years would, as described above, make selling the property potentially very difficult. Should an original lease run out completely the property owner would then assume the status of an assured tenant, lose much security of tenure and no longer have a lease to sell or extend.

So, in the most extreme situation a lease extension allows a property owner to retain basic security of tenure and in the most advantageous situation to increase the value of the lease itself and of the property.

If you are considering Leasehold Extension then speak to Bonallack & Bishop. If you want more information then contact their specialist Lease Extension Lawyers today. Senior Partner Tim Bishop is responsible for all major strategic decisions.

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Leasehold Extension - The Big Questions and Their Answers

So, you care about the value of your property and wouldn't fail to do anything that would maintain or increase it?

Are you aware that the shorter the remaining duration of your existing lease, the less your property becomes worth on the market? Sadly that is true and what is more there is an ongoing trend amongst potential purchasers and those institutions which provide mortgages to avoid buying and financing purchases of properties with leases which have less than 90 to 95 years to run. Those facts usually alone start alarm bells ringing with many property owners who might not otherwise have considered making an application for a lease extension.

A timely application for a leasehold extension could save you money. In addition to the ever increasing drop in the desirability of properties with leases of under 90 years and dwindling, when the duration of your existing lease drops below 80 years and you apply for your leasehold extension you will find yourself having to pay a considerable additional premium to your landlord/freeholder. Known as the Marriage Value, this is a sum based on an essentially subjective valuation and which could so easily have been avoided having to be paid by the elementary precaution of obtaining your lease extension whilst your existing lease still had well over 80 years to run.

Your situation could deteriorate further if you take no action to apply for an extension. For those not forewarned about the advisability of applying for a leasehold extension whilst the existing lease still has many years in excess of 90 years to run, the costly perils of the marriage value potentially await, but for those who let their lease completely expire await the twin hardships of the loss of security of tenure and becoming an assured tenant with no lease to sell or extend.

Will you be eligible to make the application? The eligibility criteria are precise but not onerous under the Leasehold Reform, Housing and Urban Development Act 1993 (as amended) and so eligibility should not be regarded as a deterring factor. The eligibility criteria include the requirements that a person should have been the owner of the property for at least 2 years, that the lease is for a residential property and that the original lease was granted for a minimum of 21 years.

You are ineligible to apply for lease extension, even if the preceding conditions have been met, if your property is owned by the National Trust, or is owned by the Crown, or if the property is situated within boundaries of a cathedral or you share the ownership of the lease or the property has already had an extension to its original lease.

There is help available for you when making your leasehold extension application. The costs of making the application might prove daunting but many reputable lenders consider that lease extension are a worthwhile investment in the value of your property and will do their best to help. If you will require finance for the application you should apply for it at the very start of your application for the lease extension, in order that it is available when needed later in process. Hiring experienced professionals to assist with your application for a leasehold extension will ensure that the application does not fail for want of adherence to the requirements of the legislation -something far more likely to occur with a DIY approach.

Bonallack & Bishop are a firm of solicitors experienced in helping tenants get a Lease Extension. They can offer you detailed advice from experienced Leasehold Extension Lawyers. Tim Bishop Senior Partner of the firm, sees himself as a businessman who owns a law firm.

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