The most com­mon form of flat own­er­ship is lease­hold, with an esti­mat­ed 2 mil­lion lease­hold flats in Eng­land and Wales. Before you enter into one of these con­tracts, it’s impor­tant to know what you are get­ting your­self into. Own­ing a lease­hold flat means you only own the right to live there, not the actu­al build­ing itself.

Under the Lease­hold Reform Act 1993, a major­i­ty of flat hold­ers have the right to extend the lease by 90 years at a fair and rea­son­able price. A pro­fes­sion­al Solic­i­tor should explain the basics to ensure that you know how long is left and when the best time is to extend the Lease.

The usu­al rule of thumb is the short­er the Lease, the more expen­sive it will be to extend & the best prac­tice would be to extend before the con­tract falls to 80 years or lower.

Let­ting your Lease drop too low is a quick and sim­ple way to wipe any mar­ket val­ue your prop­er­ty has. It also has reper­cus­sions that could finan­cial­ly hurt you fur­ther down the road:

  • The amount of years left on a Lease direct­ly affects the val­ue of it on the mar­ket. If you’re look­ing to sell in the near future, then you should ensure your lease isn’t hold­ing you back. A high Lease not only helps the prop­er­ty achieve its full mar­ket val­ue, it makes it more attrac­tive to poten­tial buyers.
  • The Mar­riage Val­ue enti­tles the land­lord to a sum equiv­a­lent to half the increase of the property’s val­ue, so avoid this by renew­ing before you hit the 80 year mark and it’ll save you mon­ey in the long run.
  • Flats with low Leas­es are hard to get mort­gaged and can lim­it you to sell­ing only to cash buyers.

By ignor­ing your Lease, you are set­ting your­self up for unnec­es­sary stress and finan­cial loss. There’s no need to sac­ri­fice the mar­ket price of a flat just because you weren’t aware of how long was left. By talk­ing to the Land­lord you should be able to find out how many years remain on the Lease, or fail­ing that your Solic­i­tor will be able to find out and offer you the best advice.

To dis­cuss any mat­ters regard­ing a Lease, please get in touch with Luke Hewitt on 01625 523988 or mail@​JBGass.​com