Flats or maisonettes are normally held on long leases. This helps to ensure that an appropriate management structure is in place and that the
obligations, including those relating to repairs, insurance and common areas, are enforceable.
Historically, many leases were granted for 99 or 125 years, but nowadays, leases are normally longer. A lease with less than 85 years left to run ought to be extended, particularly as some lenders will not lend where the lease has less than 85 years. The shorter the lease, the more difficult it is to mortgage or sell. Therefore, as the term of the lease reduces, the property loses value. For example, leases for properties on some residential estates were granted for 125 years calculated from 1976.
Where leases of properties on the same estate have already been extended, a landlord might agree to extend the lease period by 90 years or
more. The terms would be similar to the lease extensions already granted, including the premium, at a fixed starting rent, increasing by a fixed
amount every 25 years, and capped at £250 per year. Note that tenants will almost certainly have to pay the landlord’s legal costs. If the landlord agrees to go down this route, there should be no valuation fees.
A solicitor can be instructed when terms have been agreed. The wording of the documentation can be agreed quickly, sometimes within a few
days. If the property is in mortgage, the lender needs to agree to the lease extension and a ‘Deed of Substitution’ must be signed. This ensures that
the lender has security over the extended lease. The lease extension is then registered at the Land Registry which closes the existing leasehold title and opens a new one. It may take six months to complete the registration. Speaking to a recommended solicitor, particularly one with knowledge of the local area, can keep the process simple when you need to seek a lease extension.
Call Jeremy Conway on 0113 320 5000 to discuss lease extensions or any other property matter.
