Why Extend My Lease?
What are the benefits of extending my lease?
There are several benefits to getting an extension on your lease including:
You do not need to pay any ground rent for this extended period;
A lease is a wasting asset, which means that the shorter the term becomes the less it is worth so a longer term inevitably increases the value of the lease;
A
lease extension will increase the value of your property if you wish to sell, a longer term is more appealing to potential buyers;
It is easier to get a mortgage on a longer term lease. Many mortgagors will simply not lend on leases that have dropped below 50 or even 55 years.
Extending my lease – when should I do it?
There is a major benefit in extending a lease promptly. If your lease term drops below 80 years and you wish to extend you may incur additional costs – referred to as a ‘marriage value’. Furthermore, it's usually a good idea to try to extend the lease when the housing market is depressed – as the price of a lease extension should broadly correspond to the reduce value of your particular property.
What happens when my existing lease runs out – can I still extend it?
At this point the freeholder is under no legal obligation to extend your lease. Technically you have become an assured tenant in your home. There is no lease to extend anymore and you no longer have the control as the owner of the property.
Therefore if you know your lease is close to expiration, you should seek legal advice as soon as is possible.