Time for lease extensions

If you own a flat built during the 1960’6 up to the 80’s with a 99 year lease, you may well find that selling or mortgaging is quite difficult. Leases under 70 years can be hard to sell, especially in today’s unsettled economic times.Mortgage lenders are reluctant to lend on flats with short leases, as they do not return enough security. Several lenders have increased their minimum lease term requirements; the unexpired term is now 80 years or less, the premium payable may be much higher. It is now advisable for leasehold owners of flats with short leases to exercise their right to extend it. This will make selling the flat easier.The law states that 50% of the amount by which the property increases following the lease extension, needs to be paid as part of the compensation to the freeholder. An example of this is, a lease extension of £250,000 flat, with 81 years remaining on the lease, may pay a premium between £3,000 and £6,000, but to extend a lease for a property with 65 years unexpired, the premium could leap to between £19,000 and £24,000.