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Extending your Lease on you home

Date Added: February 22, 2012 08:30:23 PM
Author: dfrankbennetu
Category: Business & Economy: Marketing and Advertising
Unfortunately a lease is a depreciating asset. As the term of the lease reduces so does the value of your property. The full extent of this is not appreciated in the early years as the decrease in value is normally offset by increases in the value of your property due to the housing market. However when the remaining term on the lease reaches 80 years or less, it becomes increasingly more difficult to obtain a mortgage on normal terms. It is therefore more difficult to sell the property, thus reducing its value. An extension reverses this process allowing the leaseholder to realise the full value of the property again. It is usually for this reason that reason people extend their leases. Unfortunately the longer you leave it before deciding to extend your lease, the more expensive it becomes. Before the Leasehold Reform Act leaseholders were at the mercy of unscrupulous landlords who took the opportunity to charge high premiums for the extension and to increase the ground rent. Leaseholders watching their flats devalue had little option but to accept the landlords terms. Can I extend my lease? Yes, its more than likely that you can! The majority of lease owners will be able to extend their lease under the Leasehold Reform Act legislation. The legal requirements for having the right to extend your lease are; You own a lease with an original term exceeding 21 years You have owned your property for at least 2 years. What extension terms can I expect? You are entitled to: An extension of 90 years which is added to the term remaining on your lease. A reduction in your ground rent to nil (or a peppercorn rent) for the entire term of the extended lease. A calculated under the legislation that will determine the premium you have to pay. How to Extend your Lease What will it cost? The landlord is entitled to compensation for the loss he will experience by granting you an extension to the lease. This compensation takes the form of a premium that the leaseholder will pay. How do I get started? In the first instance we would advise that you approach your landlord and try to negotiate a price that you are both happy with. If you were able to do that then you would need to instruct a solicitor or conveyancer to represent you. Use our free Conveyancer Comparison service to find the best conveyancer for you If you have already approached your landlord for a quote to extend your lease, but have been unable to agree a price, then you have a choice of options You can commission a professional report that gives a valuation of the cost of the extension. You can then sue that report as a basis in subsequent negotiations with the landlord. Should the matter subsequently go to a tribunal, that same report will be used to back up your claim. The other option is to proceed under the Leasehold Reform Act. By taking this decision you will be taking a prescribed route. Before you even set out, you need to ensure that you are fully equipped and advised in order to complete the transaction. This entails a lot of work including; Checking your eligibilty Instructing a professional advisor Determining the premium Putting the finance in place gathering relevant information Before embarking along the second option route, you should fully consider the financial implications. If, after your negotiations with your landlord you disagreed over the price of the premium by the value of say £2,000, it may be cheaper for you in the long run to accept the landlords valuation as you will therefore not have to incur the legal costs associated with fighting it. It’s also worth remembering that you will also be expected to pay the legal costs of the freeholder in any extension. Whichever route you take you will require the services of a qualified conveyancer. Use our free Conveyancer Comparison service to find the best conveyancer for you
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