Own a flat and worried about statutory lease extension? Did you even know that those three words could even be put together and actually mean something important to homeowners? Fear not, as all will become clear. Leases are waiting assets, the value of which contracts over time. Traditionally, leaseholds have been granted to flat owners for fixed periods from 99 years to 125 years at a time. If the lease runs out, ownership of the house or flat returns to the landlord with no form of compensation needed to be given. |
In order to avoid this, there are certain steps you can take so the lease on your flat is extended, and you keep a roof above your head. Providing the lease is over 21 years old, and that you’ve had your name on the house or flat for over two years, you can formally take your lease extension request through the courts. An Individual lessee has the right to extend the lease on their house for 90 years. You might think to yourself, do I really need to do this on my house? I really don’t plan on either being around for the next 90 years or staying in the flat that I’m in for much longer. This may be true, but by the time you want to leave your current home you could come into hot water when selling your flat on to its next occupier. The valuation on your flat can seriously diminish if the time remaining on the lease dips below 80 years. You could find yourself selling up for a much cheaper price than what you bought the place for, and its actual market value. A Statutory lease extension fixes the valuation of your property on the date that it was served. If you decide not to do this and your lease drops below 80 years then when you do come to move on your landlord is within his or her rights to demand a higher premium.
You can negotiate the terms of the lease extension with your landlord yourself. But depending on the type of relationship you have with your landlord, this might not always be the best idea. These negotiations can be slow and can lead to lease extensions being scrapped altogether. When a statutory notice is served, negotiations can be pushed along quicker and more formally making things easier for both parties. The cost and time taken to complete a statutory lease extension is not fixed. There is no set time limit for a lease extension but the initial valuation and legal advice it takes to get things started could take up to three months and a stamp duty land tax may be charged on top of all your other fees if the premium for a new lease exceeds £125,000.
The important thing to remember when negotiating a new lease on your home is that, although the initial cost might be great, when compared to what you could loose on your house when you come to leave, it’s better to do it sooner rather than later. There are laws and systems in place to ensure your rights as a tenant, if you refuse to use them, then you will miss out on the money you’ve invested.
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