Lease extention

[Adampcloth]

Hi,

My apologies if this is covered some where else, but I can't seem to find it.

I own (leasehold) a 2 bedroom flat in North West London. I currently have 65 years left on my lease and have recently had it valued £430,000 so as to extend the lease to sell the property. To add another 90 years to the lease they have given me a value of between £25,000 to £46,000.

what I was wondering is why would I want to add 90 years, why can't I add 34 and bring it up to 99 so I can sell it and would this be cheaper? All of the websites I've looked at to calculate lease extension say 90 years minimum.

any help would be appreciated.

kind regards,

adam

[Diana M]

Re: Lease extention

Have you owned the lease for a minimum of two years?

If so this may give you the automatic legal right to an extension.

I've not seen the paperwork but in my personal experience once you've served the required formal /legal Notice for a lease extension then that legal right travels with the sale. In other words the lessee who buys your property 'steps into your shoes' legally speaking.

Leashold property is often sold with the price for the extension agreed (but not paid at that stage) which is then paid by the purchaser.

Mortgage lenders are fully aware of the legal manoeuvre and will advance a loan to the purchaser on this basis i.e the price includes the lease extension cost as long as everything falls into place on completion of the sale.

In fact a purchaser will find it difficult to obtain a mortgage on a property with less then 80 years left on the lease (there's a legal reason) so it may make sense to agree the deal upfront with your Freeholder before you market the flat.

If you play your legal cards right you won't have to part with a penny for the lease extension prior to the sale.

Di

[Adampcloth]

Re: Lease extention

Hi Di,

Thank you for the reply and the information. Yes, I have owned the property for more than 2 years.

That's great that I might not have to pay for the extension directly. Though I assume that the cost would be netted off from the final house sale cost so indirectly I would pay? If so would it be cheaper to get in place an extension for 34 years?

Thanks,

Adam

[Diana M]

Re: Lease extention

From what you say your lease will be seen as a "wasting asset" meaning it's value decreases every day as the lease heads towards expiry.

If you are planning to sell the property then you need to consider what a potential buyer will want not what you want.

The shorter the lease extension agreed the lower the value of the sale price.

Di