Housebuilders and developers of residential sites are increasingly selling new properties as leasehold as the ground rent can help fund on-site recreational and green spaces required by Local Authorities and create a steady stream of income. This is invaluable in the current market where the demand for affordable good quality housing stock is greater than ever.
However, there may be reasons why a homeowner may want to extend the lease or purchase the freehold. Extending a shorter lease or purchasing the freehold can add value to your property. It is always advisable to check how long is left on your lease and if you have 83 years or less you should consider acting now. If your lease is under 70 years, mortgage rates are likely to increase and you may struggle to get a mortgage at all if there are less than 60 years to run.
Most flat-owners are legally entitled to get 90 years added to their lease at a fair market price after they have owned the flat for 2 years. As a house owner, you may be entitled to extend the lease by 50 years but the process is trickier. The price of extending a lease depends on several variables, including the property value, the lease length, ground rent and negotiation.
A house leaseholder may instead decide to try and purchase the freehold. Legislation has made this easier and if you buy the freehold you can usually extend the lease to 999 years as well. In addition to increasing the value of your property and extending the lease, there are other pros of purchasing the freehold. These include; not paying ground rent, controlling any service charges and removing restrictions/conditions on the property often common in leases such as whether you can have pets. In addition, by purchasing the freehold, the value of your property may increase in value.
The bulk of the cost of purchasing the freehold is the cost of the freehold itself. There is no set price and it depends on the lease’s length, ground rent, negotiation and the surveyors’ valuation. Generally, the shorter the lease, the higher the cost.
For comprehensive, expert advice on any legal or business issues relating to housebuilding, contact us today. We have offices in Sheffield, Leeds and York, and our Residential Developer and Housebuilder Solicitors are waiting to hear from you. Call one of the team or complete the online enquiry form on this page.
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Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.