So you have decided to sell your property, or have found the flat you have always wanted but there is a short lease term....
Leases with under 85 years still remaining are likely to be more difficult to sell, as many mortgage lenders will not lend on such a short lease. Leases with 85-90 years remaining may also be difficult to mortgage with some lenders. This is because the value of leasehold properties decreases as the lease gets shorter and because at the 80 year mark, Marriage Fees are payable on top of all of the other costs involved in extending a lease. Letting the lease fall below 80 years remaining can have a material negative affect on the value of the property.
At the 80 year threshold the Freeholder becomes entitled to half of the increase in the value of the property that arises as a result of the lease being extended. The term arrives from the total value of the property + the longer lease, when married together, exceed the total value of the separate parts. The Marriage Fee will form part of the 'Premium' that is paid to the Freeholder for the extension of the lease term. The 'Premium' must be calculated by a specialist lease extension valuer. Holmes & Hills works with lease extension valuers across England and Wales.
There are 2 options, but being organised and perhaps looking into extending 6 months before you hope to sell, will allow you to consider all of the options:
Whether you are buying or selling a property with a short lease it is most important that you seek specialist, prompt advice from a lawyer. If you are selling consider your options well in advance of a sale.
Before making a formal offer, you can:
Callie will give you initial guidance on the procedure, time scales and costs involve in extending a lease. Callie will also answer any questions you may have so that you can make an informed decision on the sale, purchase and lease extension.
Posted 05/01/2017 by:
Senior Lease Extension and Enfranchisement Solicitor
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