When should you extend the lease on a leasehold property?
With all leasehold properties, you have a right to extend the lease, quite often we look at 80 years left on a lease as a time when you need to as delaying it can be expensive.
Reasons for and against extending your lease.
What is a lease extension?
With a leasehold property, the person or company that owns the property is the freeholder, if the lease expires the freeholder can take back the property, so it’s essential that it never does run out, therefore, you should exercise your right to extending the lease.
When to extend the lease.
Extending your lease will be costly so you may want to put it off for a few years but be careful as delays can be costly, as a guide any lease with under 90 years left will need extending soon.
A short lease is not attractive for a mortgage company and the length of time remaining on a lease can affect the value of your property - the more the lease reduces, the more it will reduce the resale value of a property, so if you are considering selling your property it is worth extending your lease if needed.
When not to extend your lease.
As mentioned extending your lease will be an expense I am sure you could do without, and you may be able to put it off for a bit.
Extending the lease could cost a few thousand pounds and affordability could be a factor for delaying the extension to the lease, but take advise so you know the implications of any delay.
You are 60 and you have 90 years left on the lease if you are not selling let the beneficiaries to your estate worry about it.
You may also want to look into the possibility of changing from leasehold to a freehold by buying the freehold; it’s an option worth exploring.
The reason you should not delay.
We have mentioned that you can put things off but not for long as when the term of your lease reduces the cost to you in extending it will increase a lot, so be aware of your lease term and the costs to extend it.
When looking at extending a very short lease (less than 80 years) you could be paying an addition 1% of the value of your property for each year you delay.
Best advice - speak to a solicitor for an indication of costs and some advice about your own situation.
What are my rights to extend my lease?
If you have owned your property for two years you have the right to extend your lease by 90 years, there are a few exceptions but the ownership rule normally applies, if you are buying a property with a short lease make sure the existing owners extend the lease before you buy or pass the rights on to you, but be aware of the cost.
See our guide to lease extensions
Potential New Legislation.
The Government is undertaking a review to simplify and reduce the cost of extending or buying the freehold on a leasehold property if you find yourself in this situation speak to your solicitor about any potential changes as a six months wait may be sensible.