Lease extensions can be long, expensive and complicated ordeals. At the LEC, we use premium surveyors and solicitors to simplify this process for the leaseholder and get the best deal possible.
Nevertheless, apprehension is understandable. Will going through with a lease extension be worth it? This article will examine how extending your lease can add value to your property.
Maintain Property Value
Your lease is a diminishing asset, so every year that passes, the value of your property decreases. By extending your lease, you can preserve the value of your property.
When a lease has fewer than 80 years left, problems begin to occur. For example, you may find your property difficult to sell or remortgage.
Also, when a lease dips under the 80-year mark, the cost of extending the lease increases as the leaseholder will have to pay their freeholder 50% ‘marriage value’ in addition to their lease extension legal fees.
When you extend your lease before the 80-year cut-off point, you will retain your current investment in your property, improve your chances of selling and prevent extra marriage value payments from sneaking up on your total bill.
Does a lease extension increase property value?
As you can see, extending your lease can restore the value of your asset – so you will not lose out financially.
The additional 90 years of ownership you will obtain from a lease extension will make your property more attractive to mortgage lenders and potential buyers, particularly compared to neighbouring properties that have not extended their leases.
The actual increase in property value will vary, yet, it should increase enough to cover the lease extension fees. There are some cases where the updated value is more than 200% of the leaseholder’s original lease extension payment.
Beginning action before the 80-year point will keep lease extension fees low and prevent the freeholder from receiving 50% of the increased property value.
Adding costs to mortgage
You can easily add the costs of extending your lease to an existing mortgage.
Often this is a simple process since mortgage companies are eager to protect the value of your property. The costs are usually significantly less than the value added to your property from extending the lease.
The benefits of extending your lease are evident, so if you’ve owned your property for two years and are interested in starting the process, please contact us.
You can reach us by filling out our online form, emailing [email protected] or calling us for free on 0800 098 2770.