The Importance Of Extending A Lease

It can be an extremely costly mistake for a leaseholder not to take advantage of a lease extension. It is a common misconception that extending a lease is a laborious and difficult process. Due to this, many people ignore the idea of extending and this is a big mistake.

The principles of leasehold extensions are, in fact, very straightforward. Leaseholders in England & Wales have a statutory right to extend their lease - or more precisely, the right to get a further lease of 90 years as well as your current term. The process involves serving notice on the landlord or freeholder, and obtaining a valuation for the new lease term.

Irrelevant of what costs are incurred this is eventually for the benefit of the leaseholder. A short lease can seriously jeopardise the financial investment that any property represents. Away from certain property hotspots, short lease properties are notoriously difficult to sell, with a corresponding loss of value. Mortgagors are extremely reluctant to lend against leases which have less than 50 years left to run.

Even though finances are often a deciding factor, there are other reasons for extending your lease - a sense of security and control over your own property. Anyone remaining in a property when the lease expires becomes a tenant of the freeholder, a much less advantageous position.

All of this means that lease extension is something that should be looked at sooner rather than later. Adding to the time pressure is the so-called "marriage value" - a premium that's paid to the landlord to reflect a putative increase in the property's value once its lease term has been extended. The will clearly make the process cost more. Fortunately, this only comes into effect once the remaining term on the original lease has dipped below 80 years, so timely action is usually enough to avoid it.

Leasehold extensions can be quite complicated, this is largely because a valuation is made up from variable factors, examples of these are local property prices, as well as length of notice periods. However, this shouldn't be a problem for most people, since it's something that can be safely turned over to professionals. A valuer or surveyor will help to determine the final cost of the extension, and a specialist solicitor will attend to the paperwork.

At the end of the day, an early extension will mean long term benefits.


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If you are considering extending a lease then contact Bonallack & Bishop specialists in Leasehold Extensions. Senior partner Tim Bishop is responsible for all major strategic decisions and has grown the firm by 1000% in 13 years. He sees himself as a businessman who owns a law firm.