Like so many people living in the UK today, it is likely that you are a hard working individual who spent many years accumulating your savings so that you were finally able to buy your dream home. You’ve moved in, celebrated with all of your friends at your house warming party and are now settling in to your new neighbourhood. It just so happens that you own a leasehold property. So, what does that actually mean and what do you need to be aware of?
With leasehold properties, you only own the right to live in that property for the length of the lease. As soon as that lease term expires, the property will revert to your freeholder and you will no-longer own your own home. It is therefore crucial that you know what your rights are, and how you can avoid this ever happening.
Are you allowed to extend your lease?
– You will need to have owned your home for at least two years before you are entitled to start a statutory lease extension. If you do so then you will be granted with an additional 90 years on top of your remaining lease term, and your ground rent will be reduced to a peppercorn, which essentially means nothing.
– If you are in the process of buying your own home at the moment and you are aware that the lease is low then it is recommended that you ask the existing owner to start the lease extension process, so that your solicitors can then arrange for a Deed of Assignment so that the benefit of that extension is transferred to you.
Why should you extend your lease?
– Properties with shorter leases are less valuable than ones with long leases and can also be more difficult to get a mortgage on because mortgage companies will be concerned that the value of the property will drop and that your home will no-longer be good security for them.
– Likewise, properties with shorter leases can be difficult to sell.
– You want to ensure that your home remains your own, and that the freeholder does not take possession as your lease term has expired.
When is the best time to extend your lease?
– If you have a lease with a term of 90 years or lower then it is probably time to consider extending it, because once your lease drops below 80 years, the cost of extending it increases significantly.
Our goal is help you to stay in control of your own home. If, having read this, you believe that now is the time to make enquiries regarding extending your lease then please do contact us and we will be able to assist you.
Written by Associate Solicitor, Rachel Ashton