You are not alone; there are at least 1.5 million leaseholders in the UK who are in the same position as yourself and they represent 10% of all residential owner-occupiers. This could spell real trouble, because for most of these individuals their property is their major asset.
The value of your property can fall by as much as 5% as the lease approaches 80 years or less, and drops even more if the lease is in the region of 60 years. This in turn means that it could be difficult to secure a mortgage and make the property difficult to sell. Certainly, in our experience, most lenders will not re-mortgage if the lease is less than 70 years.
You can extend the lease or buy the freehold of the property.
A standard lease extension for a flat is 90 years (see the Leasehold Reform, Housing and Urban Development Act 1993) which is added to the remaining term on the lease. This is actually a fairly straightforward process, it only becomes expensive if the lease is less than 80 years and the respective parties’ valuers have to take into account the ‘marriage value’ of the lease.
The ‘marriage value’ means the potential for increase in the value of the flat arising from the grant of the new lease. The ‘profit’ will be shared 50:50 between the landlord and the leaseholders.
Non legal costs for this rise dramatically if the term is less than 80 years. The parties’ respective valuers will rely on local knowledge and experience to assess the value of the flat as a result of the new lease.
If you hold a leasehold flat in a block or conversion, very common experiences in Central and North London, why not see if your neighbours will renew their leases at the same time (or try and acquire the freehold)? This would give you real, collective bargaining power.
Our property lawyers are here to help. They are highly skilled, talented, experienced, fully qualified solicitors who have worked in the London leasehold market for many years. They understand how stressful this whole process can be and will do everything to relieve as much of the worry from you as they can. They are cost efficient and offer attractive price plans to keep the costs of this important process down.
Contact Richard McConnell, Janak Bakrania or Layna Thompson
