The publics perception of dealing with extending leases seems to be that it is a long and complicated path of headaches. Its not so bad and can be organised with or without legal assistance. If your lease is running low, going beyond 75 years then now is the time to address this issue. You can put in a bid to extend the lease to 15 years or perhaps 199 years, depending whats on offer to you. Another option would be to band together with the others in your block or conversion and offer to buy the freehold of the property from the current lease holders.
If this is left until your wishing to sell the property it will raise certain concerns. Firstly the purchasers solicitors will wish to obtain a letter from the current freeholders stating how much money they will require for an extension of the lease. Second it is going to knock off a substantial sum from the asking price you can place your property on the market for. The latter being very important on any decent sale. If the lease extension is asking 7,000 UK pounds it may reduce your property by as much as 14,000 UK pounds if you have not dealt with this and are leaving it all to the purchaser to organise once moving.
If you do wait to sell until your lease is running low you are truly at the mercy of the freeholder whom does actually own the ground the property is built on. They can and will take advantage of these situations.
Once the lease has reduced below a certain length, say 75 years, it will be becoming more and more expensive for the leaseholder to extend this. It works on the knowledge that the shorter the lease has become the less the said property is worth and the said lease extension will make a large difference to the value of the property.
There has recently been a collapse of a very large UK based freehold company. This has cause some degree of panic around the country with tenants and lease holders wondering how there maintenance reserve funds will be affected by this situation. It is never ideal to not own you own freehold but also highly unavoidable with the UK property market. The director of the company that has gone into administration was raided by the police by serious fraud charges.
It is my opinion that if you can purchase the freehold on your leasehold properties, rather then extend your lease, then this is always the route to take.
Author Resource:
Daniel Zane is owner of London property inventories one of the UK's leading suppliers of property inventories .
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