Leasehold properties, usually flats, are generally worth more the longer the lease length is. Letting the lease fall below a term of 80 years can
make selling the property extremely difficult or extending the lease considerably more expensive. Most mortgage lenders nowadays require a minimum term of 80 years before they will be comfortable lending on a property.
Once you have owned a property for two years (and provided the lease has more than 21 years to run) you automatically become entitled to a lease extension in accordance with the statutory valuation principles under the various Landlord and Tenant Acts. Extending a lease once it has reached 80 years or less will incur a ‘marriage value’. As the tenant has benefitted from enjoying the property for a longer term, the freeholder is disadvantaged. This increase in property value is split equally between the leaseholder and freeholder, meaning 50% of the increased property value will leave your hands as a marriage value to the freeholder.
If you are considering extending your lease, talk to the property experts at Alexander JLO.
There are different ways to approach lease extensions and we can represent both lessees and freeholders. We work with carefully selected industry professionals, including surveyors, mortgage lenders and specialist valuers to ensure any deal is right for you.
Our property solicitors cover informal lease extensions (agreeing a deal with the freehold owner direct, or representing you if you also own the freehold title) and formal lease extensions (often a more lengthy process, but offering greater protection and security). You will receive the highest level of advice and representation throughout negotiations and, if necessary, applications to the Leasehold Valuation Tribunals.