Lease Extension

Lease Extension

The length of term remaining on the lease also determines the value. A lender will usually borrow on a term of 30 years plus the term of your mortgage.

You will need to instruct a valuer, this should be an independent valuer which is agreed by both parties.

A lease simply means the right to occupy a property (usually a flat) for a period, which is generally set at 99, 125 or 999 years. At the end of this time, although you can stay on as a tenant, the freeholder will own your property.

If a lease has less than around 70 years unexpired when you seek to extend it then as part of the price you will usually have to pay the freeholder. This could be significant. It is a key reason why you should consider extending sooner rather than later.

You may encounter difficulties if you want to sell your flat if the unexpired term is less than is regarded as mortgageable by most mortgage lenders. Different lenders have different criteria.

You can usually only extend a lease for a property that you have owned for at least 2 years and it shouldn't matter if you haven't been in occupation. The original lease needs to be a long lease and it should be residential, as opposed to commercial use.

The law is that you cannot compel a lease extension until you have owned the property for 2 years but that doesn't stop the freeholder agreeing to give you one beforehand.

The freeholder will usually insist that the leaseholder pays their costs in obtaining an extension to their lists so it is often hard to estimate the cost of the same when you purchase the leasehold alone.

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