What are Your Reasons for Not Extending Your Lease?

It’s Not That Urgent

If your lease has more than a hundred years to run, then you may be right and taking steps to extend it immediately maybe isn’t that urgent at all. However you do still have the right to extend by the statutory 90 years if you want to. This will increase the value of your property and will make it easier to sell too.

If there’s only 90 years remaining, you can’t put off thinking about a lease extension for any longer. Ten years can pass in the blink of an eye, and once the lease drops below the 80 year threshold, you will be landed with an additional premium to pay called the marriage value – and that’s likely to add thousands of pounds onto the price of your lease extension overnight.

The marriage value is worked out by comparing the value of your home both with and without a lease which has been extended. It also takes into account the time period where the landlord will only get a minimal rent before the lease reverts to them. If you extend your lease before it gets to that 80 year deadline, paying the marriage value can be avoided completely.

Also remember that a longer lease will make your property more valuable.

Basic Rule : Act as soon as you can to extend your lease.

It Costs Too Much

Applying to extend your lease is not free and there are most definitely costs involved. Legal costs for the services of a specialist solicitor working in lease extension are unavoidable, as are the costs associated with getting a specialist surveyor to value the right level of premium you will need to pay your freeholder. Going DIY, trying to go it alone without the help of a solicitor or surveyor could massively damage the chances of a successful lease extension application, so these sorts of costs are just something that are unavoidable.

In any event, you’re going to have to pay your freeholder’s reasonable legal and valuation costs – and neither is assay, it could be very risky simply relying on a valuation provided by your freeholder. It’s unlikely that they will be acting in your best financial interests.

On the other hand, consider the costs of doing nothing. A shrinking leasehold term will mean that the value of your property on the open market is shrinking too. Once you get below 90 years remaining on your lease you might start to notice fewer potential buyers than you may otherwise expect. Once below 80 years interest tails off even faster as buyers are put off by the marriage value fees should they want to extend the lease once they’ve bought the property.

If you’ve ignored the lease extension so long that it has dipped below 70 years, the trouble really starts. Banks generally won’t lend on properties with leases of less than 70 years [some lenders require a longer term than that and some are pulled out of  lending on leasehold property entirely], so any prospective buyer a simply not be able to get a mortgage. If the situation continues with the leaseholder thinking that it is just too expensive to consider extending a lease, eventually the lease will expire. This converts the leaseholder into a tenant with far fewer rights than a leaseholder and is the worst possible end to the situation.

Basic Rule : Costs of doing nothing far outweigh the costs of extending

It’s Too Difficult and Stressful

The hardest part of the whole process of extending your lease is probably taking that first decision to start the process. If you’ve read the information above about the costs of not extending and the benefits of extending, that decision should be relatively simple.

Of course you could choose to go down the “difficult” route of lease extension by reading the Leasehold Reform, Housing and Urban Development Act 1993 (as amended) from cover to cover, follow the instructions in the Act about how to extend your lease, attempt a formal valuation to submit to your freeholder, make sure all letters and documents are worded correctly, adhere to timescales and deadlines, respond to the counter offer and negotiate with your freeholder’s solicitor and surveyor to make sure you get a great price. But there are many traps for the unwary, and a simple mistake could mean that you have to start all over again.

Or alternatively, you could put the matter in the hands of highly qualified professionals who have spent years training and getting experience in lease extension work – your specialist lease extension solicitor and your surveyor.

Although there are not many of them, these experts deal with lease extensions every day of the week, don’t find the process difficult and don’t make mistakes. We all like to challenge ourselves but navigating a complex legal process such as lease extension with absolutely no legal training or experience is far too much of a challenge for anyone.

Basic Rule – Leave the legal work to the professionals

Considering leasehold extension? For expert legal advice to rely on, call or email us now

Our experts team can help you – wherever your flat is in Salisbury or anywhere else in England or Wales.

You don’t need to come and see us in person, but you are always welcome to do so – our team regularly help people extend their leases nationwide using e-mail and over the telephone.

So if you’re thinking of a lease extension;

  • Call 01722 422300 today for a FREE initial phone consultation OR
  • Fill out the enquiry form below

Comments or questions are welcome.

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9 Key Facts about Owning a Lease

Leasehold and freehold are two very different ways of owning residential property in England and Wales. Most people understand the basic concept behind freehold – but far fewer people really appreciate what owning a leasehold property really means.

So here are 8 key facts which every owner of long lease property needs to know.

1. There are estimated to be more than 2 million leasehold residential properties in England and Wales. The numbers of these types of properties are increasing quickly, as since the turn of the century developers have been building leasehold flats or apartments rather than houses. Why? Firstly because the size of the average British household is getting steadily smaller – so flats are more appropriate. Secondly, in general terms developers make more money on flats and apartments, as distinct from houses.

2. Most flats and apartments in England and Wales are “owned” on a leasehold basis. It is very much the norm for houses to be freehold properties, but on some rare occasions they can be owned on a leasehold basis.

3. Buying a leasehold property means you are investing in the right to live in the property for a set time period – rather than in the property itself in perpetuity.

4. The legal owner of the property remains the freeholder, who is ultimately in charge.

5. Leaseholders are never the legal owner of the property where they live. They just buy the right to live there for the time specified by the lease, under certain conditions. Depending on the terms of the lease, they will probably have to get the permission of the freeholder if they want to make certain structural amendments or improvements to their property.

6. As the lease gets shorter, any leasehold property starts to lose value – and if anyone is foolish to let a lease expire without exercising the statutory right to lease extension, then they’re left with nothing at all – just a possibility of retaining an ongoing temporary or periodic lease.

7. Leaseholders have to pay a sum to the freeholder for the maintenance of the building, and if the freeholder who is responsible for arranging maintenance of the block.

8. When the lease ends, the leaseholders either have to move out, or take the low-security option of trying to negotiate a rent from their freeholder.

9. Owning a leasehold flat means that every year the term of your lease is getting shorter. But a surprising number of residential flat or apartment owners are unaware that they have the legal right to compel their freeholder to grant them an extra 90 years on top of their existing lease.

Considering leasehold extension? For expert legal advice to rely on, call or email us now

Our experts team can help you – wherever your flat is in Salisbury or anywhere else in England or Wales.

You don’t need to come and see us in person, but you are always welcome to do so – our team regularly help people extend their leases nationwide using e-mail and over the telephone.

So if you’re thinking of a lease extension;

  • Call 01722 422300 today for a FREE initial phone consultation OR
  • Fill out the enquiry form below

Comments or questions are welcome.

* indicates required field

How to compare leasehold extension and the right to manage

The processes for obtaining a leasehold extension and taking over the right to manage your block are significantly different and produce totally unique benefits. It’s not correct to really describe them a similar, despite how they appear on the surface, because they are completely different and it is not really the case of having to choose one over the other.

In simple terms, you would not exercise your right to manage and set up a RTM company in the hope that doing so would permit you to extend your lease without the participation of the freeholder (for the intentions of this particular comparison); it wouldn’t and subsequently would not guarantee your tenure or the cost of your leasehold. Nor would you submit an application for a lease extension if what you truly desired the ability to take over, with your fellow leaseholders, the ability to manage your block and take on responsibility for organising maintenance and upkeep yourself.

What exercising your right to manage provides:

Alongside other lease holders in their block of apartments, a lease holder who has participated in the exercise of the right to manage and subsequently become a member of the RTM company, takes over the management function for their block. This management function is ‘a function with respect to services, repairs, maintenance, improvements, insurance and management’, as stated in the Commonhold and Leasehold Reform Act 2002. This is the legislation under which leaseholders are able to force the transfer of the management function to them from their freeholder.

But such a transfer under the Act leaves the individual leases unchanged and the ownership of the flat intact. Participants in an RTM company can only extend their lease in 2 ways; join forces with the rest of the residents and perform the collective enfranchisement process to acquire the freehold of their flats from their freeholder, or individually submit an application in the standard way under the provision of Leasehold Reform, Housing and Urban Development Act 1993 (as amended).

The presence of a RTM company does nothing to assist lease holders with extending their leases, although it’s creation may lead to an enhanced and more cost-effective maintenance of the building and it’s services. In fact, the premium owed to the freeholder by a lease holder applying to extend their lease could, potentially, even increase, as a well run cost efficient RTM company might mean lower service charges which in turn could in theory slightly increase the cost of any lease extension for individual flats. Nevertheless, the lease holder shouldn’t worry about the vague chance of a slight increase in the value their flat – as, simultaneously, their property is increasing in value and, due to the extended lease, is substantially more likely to sell.

A comparison of the application procedure:

As far as contrasting lodging an application to extend a lease to the complexity of establishing an RTM company, the latter should be carried out only by those leaseholders who are fully conscious of the substantial obligations on their shoulder, as it is significantly more complicated than the former. Despite the complexities, wishing to transfer the management function from an incapable or under performing landlord may seem worth it.

Lease holders could also feel passionately enough about having control over the maintenance and upkeep of their block that they may wish to transfer the management even thought the landlord is reasonably efficient.

Establishing an RTM company, is a challenging process that may place substantial responsibilities on it’s members. However like a lease extension, size the right to manage should also provide participating leaseholders a increased level of financial security and peace of mind.  But this is perhaps the only similarity – except that both processes are best handed over to knowledgeable and professional legal, surveying, and accountancy experts.

Considering leasehold extension? For expert legal advice to rely on, call or email us now

Our experts team can help you – wherever your flat is in Salisbury or anywhere else in England or Wales.

You don’t need to come and see us in person, but you are always welcome to do so – our team regularly help people extend their leases nationwide using e-mail and over the telephone.

So if you’re thinking of a lease extension;

  • Call 01722 422300 today for a FREE initial phone consultation OR
  • Fill out the enquiry form below

Comments or questions are welcome.

* indicates required field

Plans to Increase Lease Extension Work by 200%

Over the next couple of years, the specialist lease extension team here at Bonallack and Bishop have plans to double the number of lease extension cases we manage. The expert team, which does nothing but work in the field of lease extension and freehold purchase, already deals with over 220 cases every year. However, given that there are over 1.5 million long leasehold flats in England and Wales, there is huge potential for growth in this area as many of them will need a leasehold extension in the future. We think that this is an optimum time to take on an increased workload and also dedicate more people to the team.

It’s not just the upturn in the housing market which will drive more business, we are also embarking on a new marketing campaign. Our campaign is focused around educating owners of long residential leases as surprisingly few of them know that they have the legal right to force the freeholder into a lease extension of up to 90 years. The education campaign isn’t just aimed at individual flat owners. It’s also come as a shock to us to discover just how few estate agents, mortgage brokers and other professional involved in the property market really have a clear understanding of the availability of lease extension and how it works – not to mention the fact that when buying or selling a property with a short lease, lease extension becomes of critical importance.

We’re already stepping up the amount of work we’re doing in this area, and as well as dedicating a new member of our administrative staff to the lease extension team, our existing lease extension lawyers have recently had their numbers increased numbers swelled by the addition of a new trainee solicitor, who is due to qualify in September 2015 – and who remain full-time with the lease extension team.

Act now to extend your lease

We’ve got some very clear and simple advice when it comes to extending your lease – act now. With every day which passes your lease gets shorter, and this increases the cost of extending it. Rapidly rising house prices at present also affect the amount of premium you will have to pay to extend, as this is based on the market value of your house. With every month which passes and the value of your flat increases, you’re going to have to pay more to extend your lease.

Considering leasehold extension? For expert legal advice to rely on, call or email us now

Our experts team can help you – wherever your flat is in Salisbury or anywhere else in England or Wales.

You don’t need to come and see us in person, but you are always welcome to do so – our team regularly help people extend their leases nationwide using e-mail and over the telephone.

So if you’re thinking of a lease extension;

  • Call 01722 422300 today for a FREE initial phone consultation OR
  • Fill out the enquiry form below

Comments or questions are welcome.

* indicates required field