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Can I extend the term of the lease on my flat?

The negative stance of most mortgage companies regarding funding investment into properties with a short lease creates great difficulties for investors and apartment owners alike, who find their property declining in both value and saleability. If purchasers cannot secure the mortgage they need, they simply cannot buy and too many leasehold owners do not realise the effect of short leases before it’s too late.

In many cases, 80 years is the cut off point meaning that the problem is particularly prevalent now and will be in the coming years. The housing booms of the 1980′s and 90′s, combined with the architectural and policy tendencies at the time, resulted in numerous flats and apartment towers conveyed with 99-year leases.

Now 20-30 years on, these leases are short enough to put off buyers and lenders alike. If you own the lease on a property of this era and time is running out, it is advisable to seek legal advice on extending that lease to ensure you can successfully move on when you are ready. Fortunately, the modern consensus is for 125 year, or longer, leases, or for the freehold of the building to be vested in a management company which is owned by the leaseholders.

Provided you have owned the flat for at least 2 years you will have the legal right to extend your lease by 90 years through the ‘Individual Lease Extension’ procedure. Under this procedure, the lease can be extended in return for the payment of a premium to the landlord, but it is important to note that after the lease has fallen below 80 years, that premium will begin to rise.

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