Lease Extensions

Over the last ten to fifteen years Building Societies and Banks have become much more prescriptive with regard to the length of Leases they will accept for Mortgage security, and this has had an effect of reducing the Value of short Lease properties. Ideally the Lease should be extended when there is at least eighty years on the existing Lease to run. Where Leasehold properties have an unexpired term of 90 years or less, the value of the Lease incrementally decreases and once the term dips below 80 years, it becomes significantly more expensive to extend the Lease and the property may prove difficult to sell. If you are buying a Leasehold property with less than 90 years remaining, whilst it might be a good investment at a correctly negotiated price, you will need to take into consideration the cost of extension. There is only a right to extend the Lease if you have been the registered owner for 2 years. If, however, the Vendor is a qualifying tenant, they can serve a Section 42 Notice and transfer this with the sale so you do not need to wait the 2 years.