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Lease Length on Flats - Why Size Does Matter

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By : Andy Szebeni    99 or more times read
Fall below approximately 90 years and lease length will become important. We do not want to terrify readers but, when the unexpired period drops down to zero, the flat owner must give the apartment back to the landlord. The landlord is frequently an anonymous company or individual that lessees seldom see however these individuals are the other “party” to the leasehold agreement. The good news is you are most unlikely to ever allow that to happen. The bad news is that you need to pay for the right to handle the shortening lease.

As lease length drops little by little less than 100 years, it starts to exhibit an increasingly adverse influence on the value of your property. This is for the reason that in due course a lease would fall to nothing and after that the landlord will take possession of the flat. Thus an imaginary suburban flat having a lease remaining of only a year might be effectively worthless in comparison to an identical one with one hundred years. After all, who would like to acquire a flat that he/she is likely to have to pass to someone else in around a year? (It should be noted that a number of properties in central London have leases of only 20 or so years and their valuations work in a distinctive manner stemming from their attraction to especially rich investors).

The cost of the extension is determined by a complicated formula that we reflect on in a separate article; nonetheless the price rises abruptly as the period drops below 85 years. The time when it is most inexpensive to extend a lease is just about always at this moment. There is additionally a big rise in costs as the lease term falls below 80 years (when an element called Marriage Value kicks in) so lessees should act without delay if this signpost is approaching.

All leaseholders must be knowledgeable of the unexpired term of their leases. Nonetheless, this is seldom the case and many years in the future there may be unpleasant surprises for owners who have not made themselves aware of their lease lengths.

To be able to appreciate how long remains on the lease one will need to see a text of your Leasehold Title. Usually you might have a copy when you purchase the flat. If you obtained the flat with bank finance or a mortgage, it is probable the original document is held by the lender. Nevertheless, you might generally get a copy from your solicitor following completion of the transaction.

This document will show the date that the lease was granted. It might additionally say the term of the lease. This might be ninety nine years, a hundred twenty five years and sometimes as much as 999 years. Flat owners after that ought to figure out how many years have elapsed since the lease was granted and take away this from the lease term. Flat owners will then discern the unexpired term of the lease and when you ought to begin budgeting to extend the lease.

Lots of sellers set aside the responsibility of extending their leases to the last minute. If lessees are considering selling it is a lot better to have a lease extension in place than for your potential purchasers to realize either that it should be undertaken (and they will expect you to pay for this if not actually undertake it) or have to take on board this cost and effort. If everything goes smoothly, allocate six months: if there are problems it may possibly take in excess of 18 months. Therefore it is worth consulting with a specialist early in the process to appreciate your situation with regard to your lease length.
Andrew Szebeni is part of the management team of the Association of Leasehold Enfranchisement Practitioners. ALEP has in excessive of 100 vetted members including surveyors, managing agents and solicitors. Get a value of your freehold.

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