So, you own a wonderful leasehold flat in England & Wales, and you’re very happy. But do you understand why the length of time left on your Lease matters, the disadvantages that come with it and what can be done about it?
In this blog, Sophie Masters, a Paralegal from our property team, highlights the importance of understanding just that.
Owning a Leasehold Property in England and Wales
A residential lease can be described as a wasting asset that will continue to lose value over time and return value to the freeholder. When the Lease gets shorter, the property will reduce in value.
If a property is sold with a short lease, then the new owners are purchasing the land for whatever amount of time remains on the lease. When the lease expires, the property will revert back to the freeholder, a big win for them and a big loss to you. This makes properties with short leases less attractive to buyers and lenders.
Mortgage providers will often impose a minimum lease term requirement when they will not supply a mortgage; this is typically where a lease has 80 years or less remaining. So, Buyers shy away from purchasing because they cannot get a mortgage.
Further, if you wait until the lease gets to 80 years or less, marriage value becomes payable on a statutory lease extension. The general rule is that the marriage value payable will increase, and the cost you will have to pay to extend the lease will get larger the longer you wait.
The draft Commonhold and Leasehold Reform Bill is currently making its way through Parliament, which intends to improve the legal rights of leaseholders. However, it is important to note that although there have been proposals to abolish the marriage value, those reforms have not yet come into force and may not at all.
By doing nothing, you are gradually losing your asset, and it is slowly but surely being regained by the freeholder. This should not be an option, and the sooner you act, the better.
So what can be done?
The answer is to extend the lease. There are two main methods of Lease Extension: the Formal Lease Extension (also known as Statutory Lease Extension) and the Informal Lease Extension (also known as Voluntary Lease Extension). We will continue to explore these in future blog posts.
If you are content to allow your lease to continue diminishing over time, that’s fine, but if you want to preserve that wonderful flat at the value you paid for it, then waste no time and contact us.
Lease Extension and Conveyancing Specialists
Our property solicitors guide leaseholders through lease extensions, collective enfranchisement, and the right to manage. We provide clear, practical legal advice to help you protect your property, gain control over management, and secure long-term value for your home.
CQS Accredited Law Firm
Berlad Graham is accredited by The Law Society’s Conveyancing Quality Scheme (CQS), a recognised quality standard for SRA-regulated firms in residential conveyancing. It sets out the standards of competence, risk management and client service levels expected of practices.
If you are looking for a reliable and responsive conveyancing solicitor, get in touch with Berlad Graham today. You can call us on 0330 175 5655 or email: info@bglaw.co.uk.
To find out more about our residential property practice, click here.
