Extending your lease can boost the value of your property
- 8th September 2015
- Property Tips
Extending the lease of a property can make it much more attractive to potential buyers
With about 72% of London properties being leasehold quite a proportion of the capital’s home owners should be looking at whether they should extend their lease, something that has been a statutory right for leaseholders since 1993.
A rapidly diminishing lease period can become a real headache if you don’t face up to the problem early enough. In fact it invariably makes good business sense to resolve the issue as early as you can, because the longer you wait the more expensive it becomes.
Extending the lease can also be an excellent investment, because it makes your property much more marketable. There will always be a wider pool of potential buyers if you have a much longer lease and that will enable you to achieve a better sales price.
Quite apart from the personal preferences of buyers, lenders are reluctant to offer mortgages on shorter leases, so a longer term mortgage will be much more difficult to get and the buyer will have to pay a higher interest rate.
80 years is an important milestone for diminishing leases because after that the home owner has to pay the freeholder 50% of the additional value that an extended lease would add to the property (the 'marriage value'), as well as the usual lease extension fee which is calculated using current and reviewed ground rent and yield.
“There are quite a few costs involved so sitting on your hands and doing nothing could seem like an attractive option,” says Stephen Ludlow, Chairman of ludlowthompson. ”This would be a very big mistake though, because for most people their home is their most important asset and they could find its value diminishing rapidly as the length of the lease runs down.
"Our lease extension service allows homeowners the opportunity to extend their leasen at a reasonable cost and to ensure they maximisie the value of their property."
For most people their home is their most important asset and they could find its value diminishing rapidly as the length of the lease runs down
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