The complete guide to lease extensions
What is a lease?
A lease is contractual agreement between two parties with regards to an item of property. They are most commonly used for property in the United Kingdom (UK) under the term residential lease. If you are currently living in a non-freehold or non-rental flat odds are you signed one prior to moving in. The time period on a residential lease usually falls somewhere between 99 and 125 years, which in general seems like a long time. However, if it is allowed to run-out with a notice of extension being served then all interest in the flat reverts back to the freeholder. This means that not only can you lose your home, but any money you have invested in it as well.
Freehold and Leasehold
If someone owns a freehold over a property it will mean that they are owner of said property or the land that it was constructed on top of. As owner a freeholder is in control of the property outside of the lease, meaning that they can carry out construction and renovations as they so please as long as they have council permission to do so.
The leaseholder will have a long-term tenancy agreement with the freeholder, which would have been agreed upon and subsequently signed prior to moving into the property. When such an agreement is in place the leaseholder will have the right to live in the property uninterrupted. A leasehold agreement doesn’t equal ownership of the property, meaning that you won’t be able to make any physical alterations to the property itself. It is also only an agreement, meaning that it will eventually expire, if you wish to extend the length of the agreement you will need to serve a notice of extension. Almost every leasehold agreement will be based upon financial remuneration in exchange for living in the property, of which service charges will also be a factor. These payments will help to cover premises maintenance and other miscellaneous costs.
Viewing your lease
As leaseholder it is your legal right to read your lease whenever you wish to. You can do this by either asking your freeholder send you a copy, speaking to your mortgagor or getting one from the land registry. For more information about how you can do any of the above speak to a legal professional.
Short leases and property sales
Many will ask the question of whether or not having a short lease will affect the sale of their property. In a way the answer to this question is a bit of a grey area. In principal it shouldn’t affect a sale going through, but it can have a detrimental effect on the overall value of your property, possibly knocking thousands off the price. The best option for those selling with a lease of 80 years or less attached is to serve notice to extend and attach that notice to the lease, meaning that the new owner can make the application whenever they want to. The new owner will be able to obtain a lease extension without the need for the mandatory two-year live-in time to be completed. The purpose of...