Do I Need to Extend My Lease?

Many leaseholders are unsure when, or whether, they need to extend their flat’s lease. In practice, the right timing can make a significant difference to cost, saleability and peace of mind.

This article explains when leaseholders of residential flats should start thinking about a lease extension and the key things to look out for.

Why lease length matters

A lease is a diminishing asset.  When you buy a leasehold flat, you are buying the remaining years left on a lease of that flat.  As the remaining lease term reduces, the value of the flat can fall and mortgage options may become more limited.

Most mortgage lenders have minimum lease length requirements in order to agree to a mortgage on that flat, meaning shorter leases can restrict buyer demand and complicate sales.

Key lease length thresholds

There are two important thresholds leaseholders should be aware of:

• Below 90 years remaining - extending the lease becomes advisable for long-term value and marketability; and 
• 80 years or less remaining - the cost of a statutory lease extension usually increases significantly under current law, the moment the remaining term drops below 80 years remaining. 

If your lease length is approaching the 80-years-remaining mark, you should seek legal advice urgently.  

What happens if I wait too long?

Waiting to extend a lease can result in higher premiums payable to purchase the lease extension, fewer mortgage options and reduced sale prices. In some cases, buyers may insist that a lease extension is completed before they proceed.

Do I have to extend my lease?

There is no legal obligation on flat owners to extend their lease. However, many leaseholders will need to do so to protect the value of their home and avoid future complications with selling or mortgaging.

When should I take advice?

Early advice allows leaseholders to plan ahead, compare statutory and informal options and choose the most cost-effective time to proceed.

Key points 

Extending a lease is often easier and cheaper when done sooner rather than later. Understanding your lease length and options early can help you make informed decisions. Speak to one of our specialist lease extension lawyers in our Residential Property Team for further information