What To Do If Your Lease Is Too Short
If your property has a short lease, it simply means that the original lease has only a fraction of the original term left to run. However, the leaseholder has a statutory right to extend the lease, you just need to follow the appropriate steps and find a reliable source of leasehold advice.
Once your lease has less than 70 or so years left to run, many banks and building societies are averse to lending on a depreciating asset, which often results in a lower asking price for the property. This can be good news for investors who normally shy away from leasehold properties as an investment opportunity.
Property owners have a statutory right to force the freeholder to extend the lease by 90 years on top of the original term, along with a reduced ground rent. Although this process will cost money, it will usually be less than the drop in asking price resulting from the short lease.
However, to qualify for an extension of a lease you will need to have owned the property for two years or more. Therefore, if you are buying a flat with a short lease, its advisable to get the seller to serve Notice (at a price you dictate) before the exchange of contracts, assigning the benefit to you.
The first step in the process is to serve Notice upon the Landlord, or freeholder. Once Notice is served, you will be responsible for the Landlords reasonable costs including legal and valuation expenses. You will also have to pay your own Valuer and Solicitor, so make sure you factor these figures into your calculation when working out the value of the property with the current lease and the value with an extended lease.
Its imperative that the Notice contains the correct information because any inaccuracies will lead to the Notice being rejected by the Landlord. Once this Notice is served, a set of procedures will need to be followed by both parties.
Leaseholder advice is that its important that you serve Notice before your lease has less than 80 years to run, otherwise you will face an increased premium payable for the lease extension.
For more information about Bernie Wales please visit at http://www.berniewales.co.uk.
Once your lease has less than 70 or so years left to run, many banks and building societies are averse to lending on a depreciating asset, which often results in a lower asking price for the property. This can be good news for investors who normally shy away from leasehold properties as an investment opportunity.
Property owners have a statutory right to force the freeholder to extend the lease by 90 years on top of the original term, along with a reduced ground rent. Although this process will cost money, it will usually be less than the drop in asking price resulting from the short lease.
However, to qualify for an extension of a lease you will need to have owned the property for two years or more. Therefore, if you are buying a flat with a short lease, its advisable to get the seller to serve Notice (at a price you dictate) before the exchange of contracts, assigning the benefit to you.
The first step in the process is to serve Notice upon the Landlord, or freeholder. Once Notice is served, you will be responsible for the Landlords reasonable costs including legal and valuation expenses. You will also have to pay your own Valuer and Solicitor, so make sure you factor these figures into your calculation when working out the value of the property with the current lease and the value with an extended lease.
Its imperative that the Notice contains the correct information because any inaccuracies will lead to the Notice being rejected by the Landlord. Once this Notice is served, a set of procedures will need to be followed by both parties.
Leaseholder advice is that its important that you serve Notice before your lease has less than 80 years to run, otherwise you will face an increased premium payable for the lease extension.
For more information about Bernie Wales please visit at http://www.berniewales.co.uk.
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