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How short does my lease need to be before I get it renewed?
Generally speaking these days if you own a flat and the remaining length of the lease is anything less than 75-80 years then you should consider extending the length of the lease. Indeed if at all possible you should extend it before the remaining term dips below 80 years since after that the cost of extending is likely to be higher.
Increasingly buyers will look at a lease and if there is less than 80 years to go will want to factor in the cost of extending the lease whilst they own the property. Therefore the shorter the remaining term the more likely it is to have an impact on the price you can achieve for your flat and also possibly whether the lease will be acceptable to a mortgage lender.
There are two ways of obtaining a lease extension. You can agree voluntarily with your landlord to extend the lease. The landlord will want a payment in return for extending the lease and you should be careful to ensure that the amount he quotes is a reasonable one. It is always advisable to ask a surveyor to provide you with a valuation to make sure. The landlord may also want to increase the ground rent you pay each year.
The alternative is to use the legislation bought in in 1993 and known as the Leasehold Reform Housing & Urban Development Act. This gives a flat owner a right to obtain a lease extension once he or she has owned their flat for at least two years.
If you follow the statutory route then you will get an additional 90 years added to the existing length of your lease.
The statutory route is a more complicated and therefore expensive one but if you cannot reach agreement with your landlord you are safe in the knowledge that the 1993 Act guarantees you a right to extend your lease.
For advice on this and other Residential Property issues, please contact Partner and Head of Residential Property Chris Pease.
Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.