If you have 80 years or less left on your property lease, you can’t afford to ignore this….
Your lease is a wasting asset, which means that as the length of your lease decreases, so does its value. Not only that, the property may be difficult to mortgage and consequently sell. If you have held the lease for at least 2 years, you have the right to extend the lease of your property by up to 90 years on top of the remaining term (subject to certain exceptions).
But beware; the shorter the term left on your lease, the higher the cost to renew. You could pay significantly more to extend your lease if your lease term has less than 80 years left. So, we recommend that you take action well before your lease reaches this limit.
Why does a lease renewal cost more if it’s less than 80 years?
The cost to extend a lease is assessed in four main parts:
the value of the ground rent income
the value of the freeholder’s reversion at the end of the lease
50% of the ‘marriage value’ i.e. the amount that the value of the property increases when the lease is extended. This sum is not payable if the existing lease has more than 80 years unexpired.
any other specific considerations applicable to the property.
It is this third point, the marriage value, that only kicks in under 80 years and the shorter the lease, the more the cost escalates.
How can DHCS help with your lease renewal?
Daniells Harrison Chartered Surveyors provide a comprehensive service to ensure your lease extension process is as straight forward as possible. It includes:
Advising you of your legal rights
Telling you what you need to qualify
Preparing the complex calculations required and produce a Lease Extension valuation report
Guiding you through the process of serving notice on the landlord
Negotiating a final figure on your behalf
If required – representing you at the First Tier Tribunal
The recent appointment of Annabelle Argent in our Commercial team, has given DHCS the capacity to take on more work in this area. We have carried out recent valuations for extensions in many areas across the South including Portsmouth, Bordon, Windsor, Bournemouth and East Sussex.
When we undertake a valuation, it involves inspecting your property and calculating and advising on the premium to be paid. Our valuations take into account any tenants improvements. We will always assume a 90 year lease extension unless agreed otherwise.
So, if you own a leasehold, make sure you know how long you have left on your lease and take action to renew it if less than 80 years old.