To extend … or not to extend??
Even if you’ve never owned a flat before, you probably already know that a long lease is an attractive lease and makes a property more marketable. But when is the best time to extend?
Brexit (amongst other things) means that confidence in the property market is not great at the moment and it will take some time for that belief to return. Putting the market to one side, there has been loads written in the press and on social media about the Government’s planned changes to leases and in particular ground rents. These changes are likely to take years to come in to force.
It is impossible to gauge what is going to happen, so you are planning to sell your flat in the next 2 to 5 years (and if you can afford to) then it is probably best to extend now. Sitting on your lease extension until you come to sell could ultimately delay that sale by many weeks, if not months.
Regardless of whether you are planning to sell, you should always extend your lease before it gets to 80 years. After that point it not only becomes more expensive to extend the lease itself, but there is no way of avoiding having to pay the Landlord’s fees and a valuation fee.
What do you get if you extend?
Once the lease has been registered in your name for two years you are entitled to an additional 90 years on top of the existing term with the rent being reduced to nil (or “one peppercorn”). It is possible that you may agree other terms with your Landlord.
If there are a number of you who are wishing to extend the leases in your building there may even be some considerable advantage if you spend your money buying the freehold and then extending your leases at no extra cost.
Virginia would love to hear from you if you are interested in extending your lease or joining with your neighbours to acquire the freehold. Please fill in the form below and she will get in contact with you to discuss your options.