Many people today are finding when they come to sell (or buy) a long residential lease of a flat that questions are raised over the length of the lease. Many mortgage lenders are now demanding longer terms of lease before they will consider a property to offer good security and many more conveyancing solicitors are now alive to the issues and costs which can be incurred when a lease becomes short.
Generally most residential leases can be extended under the Leasehold Reform and Urban Development Act 1993 provided the Lease has been owned for 2 years. The procedure is however complicated and full of pitfalls for the unwary. In particular there is an issue if the length of term falls below 80 years in that the Leaseholder will then need to pay to the Freeholder one half of any marriage value (this is of itself a topic for another blog!). This can hugely affect the price payable for the extension since if more than 80 years is left on the lease then the price is basically calculated having regard to the Ground Rent payable ( apologies to all you valuers out there for over simplifying this). It is vital that all Leaseholders keep this in mind and should always take advice about extending a lease well in advance of 80 years and if you are looking to buy a lease getting close to this deadline that you factor these costs into your purchase considerations.
The moral is take care and know what length of lease you may have and act before it reaches 80 years!