Although most banks will lend where there is a remaining term of 70 years, it is advisable to have at least 80 years remaining on the term of your lease.
Once the lease term reduces to 80 years or below, the cost of a lease extension can increase significantly. In addition, when you come to the sell your flat the reducing term of the lease will have a significant effect on the saleability of your home.
There are two methods available to you in extending the term of a lease:
- By mutually agreeing terms for the lease extension directly with your freeholder/landlord;
- Under the Leasehold Reform Housing and Urban Development Act 1993, as amended by the Commonhold and Leasehold Reform Act 2002. Once you have owned a leasehold property for at least two years, you are entitled to purchase an extension to the existing lease term by a further 90 years at a peppercorn ground rent. The premium payable for the lease extension is assessed by a surveyor.
If you require any further information on the procedure or details of the likely costs, we can advise you further. We have a separate Leasehold Enfranchisement Department at Gregsons which specialises in this area.