subject: Would You Buy A House Without A Lease Extension? [print this page] You are legally able to sell a property under the original lease even where an extension has not been applied for under the Leasehold Reform, Housing and Urban Development Act (1993).
But depending on how many years the original lease still has to run the task will be either easier or much more difficult. A specialist solicitor would be able to determine a leaseholder's particular circumstances in this respect and advise the urgency with which he or she should make their application for a leasehold extension.
This connection between the remaining duration of your lease and the saleability of your property is the result of a number of external and unavoidable factors amongst which the most intractable is the reluctance of buyers and lenders to favour properties with leases with less than 90-95 years remaining. Crucially is currently commonplace for mortgages to be refused on properties with leases with less than 70 years remaining; a minimum duration requirement that has increased from 50 years over the last few years indicating a tightening of the lending criteria based on the linkage between lease duration and property value. Thus, should you be unable to apply for a lease extension before the remaining duration of your lease falls below 70 years, your likelihood of attracting a buyer falls steeply until such a time as you apply for and are granted that extension. The obvious solution to the prospect of finding your property with insufficient lease remaining to qualify for a mortgage is apply for the leasehold extension before you put the property on the market.
How many property owners would deliberately allow their properties to decline in value due to, for example, an unwillingness to remedy a simple structural problem? A reluctance to apply for a lease extension, as the duration of the original lease approaches the 90-95 years or 70 years remaining points could be viewed as hardly any less injurious an owner's ambitions to sell his or her property. Making an application for a lease extension, with the aid of an experienced professional, is not usually onerous and due to the relatively depressed state of the housing market the values of a proportion of properties in certain areas of the country have actually declined and whilst this doesn't affect the fundamental lease duration and property value linkage, it can make your application for a leasehold extension more affordable. This is because the negotiated price payable to your landlord as part of the lease extension process is calculated on the basis of the market value of your property.
To summarise, if you want to sell your property quickly and for the best price possible, it might be wise to consider applying for a lease extension beforehand to ensure that it goes onto the market with longest possible lease.
by: Tim Bishop
welcome to Insurances.net (https://www.insurances.net)
