You’re buying your first flat. Mortgage arranged – check. Survey carried out – check. Removal company booked – check. Length of time left on the lease – sorry?
There are around 1.8 million leasehold properties in the UK, but many of these owners won’t understand the potential problems involved in having a flat with a short lease.
Homeowners will be left with a so-called ‘wasting asset’ if the length of the lease falls below a certain level. It is generally accepted that the property will start to reduce in value, and the owner may find it hard to sell a flat with a lease of less than 80 years.
That’ll be £15,000, sir
When I bought a flat about 15 years ago I was told that there was 83 years left on the lease. No problem, I thought, I’ll sell it in a few years and get somewhere bigger, certainly within the next 83 years.
Six years later, when I came to sell the flat, I was told that I’d better extend the lease in order to make it marketable, as a lease below 80 years is seen as a problem.
So I contacted the freeholder and was told that it would cost me £15,000 to extend the lease to 99 years. In the end I lopped £3,000 off the asking price to get a quick sale.
What’s the Leasehold Valuation Tribunal?
The truth is that there is plenty you can do if you’re stuck with a lease that falls below the 80 year mark. A leaseholder who has owned a flat for at least two years can use a Section 42 notice to seek an extension of 90 years to the current term.
If negotiating with the freeholder on an informal basis doesn’t work, the Leasehold Valuation Tribunal (LVT) can arbitrate to find a solution. The decision of the LVT is binding and is provided in writing after the hearing.
The problem is that many property owners don’t know that they have certain rights when it comes to extending their lease. So have you had trouble with the length of the lease on your property? And what have your experiences been when you tried to extend it? Have you used the LVT and what was the outcome?