A buyer may find it difficult to source a mortgage for a property for which a lease extension has not been applied, unless the original lease still has in excess of 65-70 years to run. The same buyer in the UK will find almost no mortgage on offer for a property which has a lease with less than 50 years to run. After having been unwilling to offer mortgages on properties with leases with fewer than 50 years to run, many mortgage providers' required minimum lease duration qualification has in recent years risen to 70 years - a direction of travel that might be anticipated to continue.
Thus, a timely leasehold extension can be guaranteed to retain or increase the value of a residential property, make it saleable and provide the vendor with a market advantage over other vendors with properties that have dwindling leases and for which no leasehold extension has been applied. The lease can thus be seen to have a value linked to its remaining duration which in turn links to the overall value of the property.
The ideal time for applying for a lease extension is before the 80 years remaining point. Let the original lease's duration slip below that point and the property's market value will start to decline proportionally with the reducing duration of the lease. Should a lease holder miss out on obtaining a lease extension before the duration of the lease drops below 80 years, it would be wise to arrest the decline in the value of the lease and the property by obtaining the extension as soon after that point as possible. Made before the lease drops below 80 years, the application for the leasehold extension would not incur for the applicant the additional expense of having to pay the Marriage Value, a premium the landlord will charge if the lease has less than 80 years to run at the time a lease extension is granted.
Leaving the original lease to dwindle to a remaining duration of less than 70 years would, as described above, make selling the property potentially very difficult. Should an original lease run out completely the property owner would then assume the status of an assured tenant, lose much security of tenure and no longer have a lease to sell or extend.
So, in the most extreme situation a lease extension allows a property owner to retain basic security of tenure and in the most advantageous situation to increase the value of the lease itself and of the property.
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Are you considering the possibility of a Leasehold Extension [http://www.leaseextensionuk.co.uk/leasehold-extension ] for your flat? Get in touch with a specialist Lease Extension [http://www.leaseextensionuk.co.uk ] Lawyer at Bonallack & Bishop first.
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