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25-03-2019

What exactly is a leasehold property? When do i need a lease extension?

Daniel Moore, Partner and Head of the Moon Beever Property department explains. 

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What is a leasehold?

A leasehold flat means you are renting the property from the landlord for a certain amount of time, it also details what ground rent you must pay. The lease is effectively a wasting asset, so every year you own the property, the lease reduces accordingly. Once the lease gets close to 80, a leaseholder should consider extending the lease because the cost of extending will become considerably higher after this mark, due to ‘marriage value.’

What is marriage value?

This is added to the valuation of the price and cost of the lease extension but is set at nil over 80 years. Marriage value increases as the lease gets shorter and can cost a leaseholder who lets their lease extension go below 80 a considerable amount of money.

I think I need to extend my lease, what more do I need to know?

You are legally entitled to add 90 years to your lease at market price. Adding years to a lease often makes the property more valuable and saleable. You might want to use our lease extension calculator (click here).

In order to extend the lease, a few rules apply:

  • You must have owned the flat for at least 2 years
  • The flat must have had at least 21 years when established

It is always best to seek legal advice at an early stage. If you want to discuss lease extensions, or any other property related matter, feel free to contact our team on the details below.

Click here to access our free leasehold calculator. 

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