Leasehold Experts Advise Reviewing Leases Now Could Add Value To Properties
Leases on properties should be reviewed and extended sooner rather than later to add value to properties in an uncertain housing market, say residential property experts.
Extending a lease can be one of those admin tasks many put off, but it could cost thousands more than needed if left ignored. Leasehold experts at law firm Irwin Mitchell say that with potentially more time on people’s hands, lockdown is actually a good time to review whether a lease needs extending – especially if you’re looking to sell a property – as well as sorting out any issues, such as ground rent concerns.
Acting now can also set people up perfectly for when lockdown is eased if they plan to move.
Expert Opinion“Many residential property experts are anticipating that while housing prices will fall in the short term, many more will still be looking to move once the crisis is over – perhaps the plans were already in place or being inside has prompted that decision.
“If you’re in a leasehold property, such as a flat or a new build, then it’s worth looking at whether your lease needs extending as doing so could put your property in a better position to sell. Properties with a longer lease generally have a better chance of selling and can even add value to the property after the initial spend on extending.
“Though we can’t predict how house prices will be affected in the long term, if house prices are lower right now then it’s likely a lower sum will be paid for a lease extension compared to if house prices were to recover again.
“While the lockdown is in place, leases are continuing to get shorter regardless. It might now be the case that landlords are more lenient to make changes, so don’t be afraid to have that discussion with them or talk to an expert about what your options are. Valuation advice is always recommended for anyone looking to extend their lease for whatever purpose.” Leigh Shapiro - Partner
Rightmove recently announced it had recorded a 40% drop in the number of properties listed for sale since the end of March after the UK went into lockdown, suggesting homeowners are using the time to wait out the uncertainty – making it an ideal time to see if any improvements can be done, like lease extensions.
How can you find out if your lease needs extending?
Leigh continued: “If you have a copy of your lease, it will tell you how long it is granted for and from when; however, this isn’t always straightforward to read if you don’t know what you’re looking for.
“If you don’t have any documentation to hand, how long is left on a lease should also be stated on your title at the Land Registry; this is something a solicitor can look up for you.”
However, the experts also warn that financial difficulties caused by COVID-19 should always be discussed openly and honestly. Leigh said: “We’re advising not to wait to extend leases at the moment, but if you’re in financial hardship because of the coronavirus lockdown then you’ll need to assess your own personal situation.
“Some people might look to re-mortgage if they’re able to cover the costs of the lease extension in the hope it’ll add value to their property long-term, particularly as interest rates are low. However, it’s never advised that anyone should put themselves in financial difficulty because of it – it’s always worth having a sensible discussion with your landlord to see if an agreement can be reached.”