If you have a mortgage or own a leasehold property, then you may feel that the lease is getting too short. Even if your property’s lease is under the eighty years mark, fear not!
This blog intends to look at the different circumstances behind extending leasehold properties.
What is a Leasehold?
When buying a property, you can either buy a ‘freehold’ or a ‘leasehold’. A freehold is where you own the property outright; Whereas if you bought a leasehold property, you would still have a landlord and a lease.
How long is the average lease?
Depending on the property may depend on how long the leasehold is. Some come with a set amount of 999 years, others with forty. However, if you are buying a leasehold property, you want to buy one with a lengthy lease.
What does it really mean to extend a lease?
As mentioned previously, every property has a lease, example 90 years. After the end of the lease, the property reverts back to the freeholder meaning the leaseholder has no legal rights over the property. This can seem unfair, which is why leaseholders are able to appeal have leases extended.
Can I extend my lease? And should I extend my lease?
T he simple answer is, yes you can extend your lease. But before you jump in with both feet, you need to decide whether the process is worth your time and expense. The general rule is if a property is under 90 years, you need to get it extended. There are three reasons for this:
- Those properties with shorter leases are less desirable and not as valuable
- Therefore, because a property is less desirable (because of the lease) it would make the property harder to sell
- Also, leasehold properties with short leases can be more difficult to gain a mortgage on
Why would I not want to extend a lease?
There are a few different circumstances that may stop you from extending your lease. It may not be particularly worth the hassle if:
- If your property’s lease is well over ninety years, then you probably wouldn’t benefit from a lease extension
- If you are unlikely to outlive your properties term of lease
- If you are considering moving out of the property
- If you are a bit tight for money
- If you are planning to buy the freeholder out so you would no longer be part of a leasehold agreement
Can I extend my lease now?
Of course, you can extend you lease; however, you must remember you can only do this if you have lived in the property for over two years. After these two years, then you are entitled to demand an extension of ninety years.
If you have only owned the property for two years, then you can enter a non-statutory agreement with the freeholder. However, this may take much persuasion and informal lease extensions do come with a few risks. Or, if the leaseholders before you started the process of extension, you may be able to carry this on.
Although, you would need to ensure that the correct rights were passed onto yourself when you bought the property.