Before signing and committing to any agreement, especially one you’re devoting a substantial amount of money, you should know exactly what it will offer you.
As an organisation that prioritises the experiences of leaseholders, we know that clearly understanding the benefits and value a lease extension will add to your property is at the forefront of lease holder’s minds.
Here, we’ll discuss the benefits of extending your property lease and clearly identify why it is (often) an essential and in most instances a worthwhile investment.
Is it worth extending the lease on my flat?
Lease extensions can have a reputation for being costly, confusing and timely processes, so it’s understandable that some leaseholders might be hesitant about starting the process. However, with the proper guidance, professional support and a well-informed approach, you can achieve some significant benefits for your property and lifestyle.
Here are the ten most beneficial reasons for you as the leaseholder to extend your lease with a statutory lease extension.
1. Increase the value of your property.
As your lease term gets shorter, your property’s value will decline; extending your lease will help mitigate this.
A leasehold property with a long lease can add thousands to its value on the market. Learn more about your potential premium by reading our ‘How much value will extending my lease add to my property?’ article.
2. Avoid paying more for your lease extension in the future.
If your lease has less than 80 years left, a ‘marriage value’ (an additional premium payable to the freeholder) applies, which means it is more expensive to extend your lease.
It’s much preferable to extend your lease before the 80-year mark than take the hit of an extra charge.
3. Enjoy a regulated, legally protected procedure.
Taking the statutory lease extension route means that your freeholder must adhere to a specific time frame and respond in line with strict deadlines specified in the Leasehold Reform, Housing and Urban Development Act 1993.
While the timescales are generous, it holds your freeholder legally accountable to complete each step of the procedure, unlike an informal lease extension. Learn more about the speed of the lease extension process in our ‘How Long Will My Lease Take’ article.
4. Eliminate your ground rent.
By extending your lease, you’ll receive a peppercorn (zero) ground rent, which can save you money, especially if your ground rent increases or doubles throughout the lease term.
5. Avoid unreasonable terms of your lease.
The informal route, which is un-regulated by law, may bind you to unfair terms, which can leave you out of pocket or leave your property unsaleable.
By taking a statutory route and following the advice of our specialist solicitors and professional surveyors, you can avoid unreasonable terms proposed by your freeholder.
6. Ensure stable living conditions for your future.
On a personal level, extending your lease gives you more security, flexibility and control over your property, as you’ll be entitled to an additional 90 years added to your existing unexpired lease term.
7. Reside in a desirable area.
A leasehold is often the only way to own an apartment – particularly if you seek accommodation in a popular, in-demand area such as a city centre.
If you extend your lease, you’ll be able to continue living in a desirable area you might otherwise not have access to. Plus, you will safeguard your investment to date in your leasehold property.
8. A lease extension makes it easier to sell the property.
If your lease is short, only a few mortgage lenders will be prepared to lend money to mortgage or re-mortgage your property.
If you try to sell, the short lease can stop potential buyers from being able to purchase the property due to the inability to secure a mortgage. This makes your property much harder to sell.
So if you’re planning to sell your leasehold property in the future, extending your lease would be a wise idea. You can delve further into this topic by reading our ‘Buying or Selling a Leasehold Property: What You Should Know’ article.
Again, it’s advantageous to set your lease extension into motion before the 80-year mark to avoid paying the ‘marriage value’ to the freeholder.
9. It is easier to pass on your property.
If you hope to leave your property to a family member or another trusted individual, it’s beneficial to extend your lease.
Obtaining a long lease will ensure that your home is protected throughout your lifetime and make it easier to pass on your property to a loved one without burdening them with extra complications or excessive charges.
10. A lease extension might be better than buying the freehold.
It’s generally slightly cheaper to extend your lease than to buy your freehold.
If you don’t want to oversee the maintenance and responsibility of the property and land, a lease extension may be a better option.
Plus, with a lease extension, you can act alone. You don’t have to go through the process of finding the right amount of eligible neighbours and setting up a limited company.
You can start the lease extension procedure when you wish as long as you’re eligible.
If you’re considering the benefits of a property lease extension, you can find precise information about the procedure by reading our ‘How to Extend Your Lease’ article.
Alternatively, you can contact us for a no-obligation consultation and lease extension advice. Our team of nationwide experts are always happy to help.