© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
The UK is officially in recession and property prices have reached an all time low; this is not great news. However, this grey cloud may have a silver lining for flats owners with long leases. With a stabilisation of property prices still to come, long leaseholders should seriously consider taking advantage of the slump in property values now and get their leases extended.
WHEN CAN A LEASE BE EXTENDED?
Subject to a few exceptions, all long leaseholders who have held their lease for at least two years have the right to renew their lease. Unlike the collective enfranchisement process, the right to renew your lease is an individual right. You may apply for a new lease at any time while you have a long lease unless the application is made during the enfranchisement process; if this happens, your application will be “stayed” or effectively put on hold, until the enfranchisement process has been completed. Under some circumstances, Personal Representatives also have rights to seek a lease renewal.
HOW WILL THE SLUMP IN PROPERTY PRICES HELP ME TO EXTEND MY LEASE?
Once you have established you are entitled to extend your lease, the next question will invariable be, “how much will it all cost me?” In order to determine the premium payable for a lease extension, valuation surveyors will use a formulate set out by statute. However, part of the cost of the lease extension will be determined by the value of the property at the date the notice of claim seeking to lease extensions is served upon the landlord. Therefore, property valuations are highly significant when it comes to lease extensions and leaseholders may be able to take advantage of the currently low property market values.
WHAT IS THE BENEFIT OF AN EXTENDED LEASE?
An extended lease will invariably make your property more saleable; the longer the lease term left, the more marketable your property will be. Also, generally speaking, mortgage lenders are still operating strict lending terms and usually tend to shy away from lending against leases that have less than 80 years left to run. Having a long lease invariably makes your property more saleable. In addition, a lease extension will generally tend to be cheaper if there are more than 80 years left to run on the lease. This reason for this is that something called “marriage value” (a valuation concept) will not be payable. It is not necessary to go into detail in this article about what the “marriage value” save as to say, in simple terms, a lease is a diminishing asset and everyday that goes by, the terms of the lease reduces. The shorter the lease term, generally, the more expensive it will be to get your lease extended.
So as you can see, the recession does not necessarily mean all doom and gloom for flat owners with long leases. Leaseholders should take advantage of the low property values and seriously consider making a play to get their leases extended. So what is it you are waiting for now…get extending!
For further information regarding this article, contact Roger Hardwick, Head of Leasehold Enfranchisement, Brethertons Solicitors.