Press release 4 April 2009 - IS IT TIME TO EXTEND YOUR LEASE ?

With property prices dropping in the recession, now may be a good time for leaseholders of flats to think about extending their lease, advises Georgina Walters, Head of Property at Salisbury-based solicitors Bonallack and Bishop.

According to Georgina, many people do not realise that if they have owned a residential flat for two years on a long lease (such as a 99 year term), they are likely to qualify for the right to extend a lease by a further 90 years. Anyone wishing to improve the value and saleability of their flat, especially if they are thinking of selling in the near future, should consider the following:

1. Once the remaining term of the lease has dropped below 90 years, it's worth considering an extension. However, if the remaining term drops below 80 years, then the price of lease extension increases significantly.
2. Extending the term of your lease can make it much easier to sell. Currently buyers are often more concerned about the length of the lease than whether the block is well managed. In an uncertain housing market, mortgage lenders are also tightening lending criteria and may not offer mortgages on flats with short leases. In addition purchasers are often willing to pay more for a longer lease.
3. Unless you can reach agreement with your landlord on the price of a lease extension, it often advisable to get a formal valuation from a specialist surveyor early on. This can help increase your negotiating power and provide evidence in any subsequent application to the Leasehold Valuation Tribunal, if that should prove necessary in the absence of agreement.
4. The price of extending leases with over 80 years left is not expensive - and much cheaper than waiting until the term drops under 80 years. In addition to legal costs, any tenant must pay compensation to the landlord for the loss their landlord suffers as a result of a lease extension (i.e. the difference in the value of the flat before and after the 90 year lease extension was granted) along with the landlord's reasonable costs and any valuation expenses.
5. Any tenants with concerns that their block is poorly managed, or who think that their management charges are too high, might also want to consider taking the right to manage the block from their landlord.

If you're interested in learning more about how to extend your lease, Bonallack and Bishop and DMA Chartered Surveyors are holding a free seminar concerning leasehold extension, collective enfranchisement and setting up a right to manage company at the Grasmere House Hotel, Salisbury, on Monday 20th April from 6-7.30pm.

For more information or to book a place, please contact Caroline Skutt on 01722 424424 or caroline.skutt@bishopslaw.com.

For specialist lease extension advice you can rely on, Georgina can be contacted at 01722 422300 or e-mail Georgina Walters