Despite there being a general trend of rising property prices, since December house prices have begun to fall, by as much as 0.1%. Unfortunately, thanks to the fragile economic recovery, many experts are saying that property prices will continue to fall in 2011.
Whilst falling housing prices are a symptom of tough economic times, it’s not all bad, and anyone looking to extend their lease might find that it pays to do so as property prices continue to fall.
But why go through the rigmarole of lease extensions in the first place? Well, the advantages in longer leases are clear, for instance, if your flat has a short lease (e.g. 70 years) then you will see its value decrease over time, because mortgage lenders usually will not consider loans on flats with short leases and instead many will ask for about 30/40 years left on a lease after a 25 year mortgage is paid.
What you mightn’t realize is that claiming your lease extensions is a statutory right, as is the right to manage your block just as long as you’ve owned your property for two years (even if you don’t live there.)
Before you consider extending your lease, you should consider the following:
• Equip yourself. Find a copy of your lease and know what your ground rents are
• Find a competent surveyor and ask them about the 13 variables they need to calculate the premium, that way you can assess their expertise.
• Don’t get fooled into buying a short extension with a high ground rent: you’re entitled to add 90 years extension with no ground rent.
• Your original lease doesn’t get destroyed – it becomes extended via a deed of variation.
• Register the deed of variation at HM Land registry so it becomes part of your property’s title.
• For tactical advice on claiming the right to manage to online block management, try leaseholdersupport.co.uk.