In the UK leasehold is one of the most common types of property ownership, so it is worth getting your head around. Whether investing or buying a property to live in understanding the terms of the lease is key to protecting your interests. Of all the important things to know, the length of the remaining term is a priority. This determines how long you will own it for affecting its value and whether it is a good buy. If the lease is not as long as you want it to be, it is possible to apply for a lease extension. This can increase the value of the property and strengthen your investment. Here we look at what you need to know about a lease and how to extend it.
What Is A Lease?
A lease is a legal agreement between a property purchaser and a landlord which sets out the commercial terms of the arrangement. The lease will include key information from the price, rights and responsibilities of both parties and as we are looking at today the length of the lease remaining. If you are purchasing a leasehold property it is essential you have an experienced conveyancer look through the contract. Alos, make sure you understand the terms and your liabilities before you exchange and make any formal legal commitment.
Why Does The Length Of A Lease Matter?
When a lease expires the ownership reverts back to the landlord, this is super important to understand. When you purchase a lease it is not in perpetuity, it is only for the length of the lease term. A lease length can be anything from one or two years to 999, so they can vary dramatically. If you are looking to live in a property, you will want to be reassured you have a nice long lease so you can enjoy security of tenure.
If you are purchasing a lease as an investment, generally the longer the lease the higher its value. Short leases can be notoriously hard to mortgage which can make them harder to buy and sell, lenders prefer properties with a lease of 80 years +. Make sure you ask how long a lease is before you get any further down the line. As finding out a shorter lease length than expected later into the transaction can lead to complications.
How Can You Extend A Lease?
Extending a lease can be less complex and timely than it has to be with the right team by your side. Here are the key steps to extending a property lease as simply as possible;
- Appoint a lease expert solicitor who specialties in lease extensions like Waterstone Legal. They will ensure you are property protected and that the process is handled as efficiently as possible.
- Get the leasehold property valued by a surveyor who can assure that you are paying a fair price for the lease extension.
- Make an offer via a s42 notice to the landlord which will lead to price negotiations. It’s highly recommended this notice is drafted by your leasehold solicitor to ensure compliance, preventing delays.
- Agree the deal and pay a deposit, this will set the extension in motion to be handled by your conveyancer. The whole process can take from 2- 12 months depending on the speed of communication, experience of your conveyancer and complexities of the lease.
The core agreement in a lease extension that needs to be made is between the leaseholder and freeholder on length and price. Having specialists in surveying and lease extensions can help reassure both parties a fair deal has been made and speed up the process. It is a worthwhile effort as once you have been granted that precious lease extension, you are sitting on a far higher value nest egg for the future.
The Wrap Up
Extending a lease is a smart way to increase the value of a property and highly recommended if you are buying a short lease. Having a lease of over 80 years makes it far easier to buy and sell due to its appeal to lenders. Leases below 80 years can be far trickier to mortgage. The sooner you decide to increase a lease the better as the shorter it gets the more expensive it can become. To extend a lease you will need to instruct a leasehold solicitor to handle the legal process.
Also, have the property assessed by a professional lease surveyor to determine its value. The process can take from 2 – 12 months and once granted provides a much higher security of tenure and investment value of your leasehold property.
Ready to talk to a leasehold specialist? Book a free consultation today with one of the best leasehold solicitors in London and unlock a better investment for your future.
