Don't wait for reforms to extend your lease - act now!
In January, the Government announced that it will be making fundamental changes to leasehold that will have an impact on flat owners going forward. See our previous blog for details. These changes will be rubber stamped by legislation that is to be brought forward during the current parliament. However, anecdotal evidence from lawyers shows that some leaseholders with short leases are putting off negotiating a lease extension with their freeholder because they think they may be able to get a better deal as a result of the reforms.
Two points. First, there are a number of technical points around valuation that wil need to be ironed out before the legislation is drafted, let alone passed. And second, the value of a leasehold property reduces as the lease term expires. If a flat owner finds him or herself in a situation where they need to move before the reforms are in place, they may not be able to achieve the selling price they expect.
So our advice to anyone with a lease of less than 99 years remaining, is to ignore any potential changes in the law and extend the lease. This is particularly important if the lease has just over 80 years remaining because once you hit the 80-year threshold something called ‘marriage value’ comes into play and your extension will cost you more. The government is talking about dropping marriage value – but they are likely to have a fight on their hands – so leaseholders shouldn’t assume this will happen and risk their lease dropping below 80 years in hope of getting a better deal.
If you have owned your property for two years, you have the legal right to a lease extension. This means going through a formal process that involves serving a specific notice on your landlord in a particular way. You will need professional advice from a property lawyer to guide you through the process. We have plenty of information and an E-book on our website that will tell you more. And our experienced team at Ringley Law can also offer help and guidance.
Author : Maryanne Bowring
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