Lease and Thank You

TIME is money. That’s the short story when it comes to buying a leasehold property in west London – and it’s also where a good estate agent can help you avoid making a costly mistake!

The majority of flats in London are ‘leasehold’ – meaning that although you own the inside of the flat, a ‘freeholder’ owns the external building and the grounds. So it’s worth getting the full scoop on a leasehold property when you make your first viewing as the length of the lease dramatically affects the value.

First things first. Every lease runs for a certain number of years. Look for a lease with at least 80 years to run. This makes getting a mortgage much easier and makes extending the lease much cheaper.

Anything less than 80 years and many mortgage providers may be wary, as you will have to pay the ‘marriage value’ to extend the lease. Which means the lower the number of years, the most expensive it gets to extend – especially if the flat is worth a fair bit of dosh.

Now that you know what you’re looking for, quiz the estate agent. Any agent that doesn’t know the details of the lease (or can’t find them out quickly), or is shifty on the details, is worth avoiding. Walk away!

As a prospective buyer, the value of the flat can only properly be determined if you know the value of the lease. It’s also a good idea to have your solicitor go over your lease carefully to make sure that the lease is in order. Unfortunately, over the years I have seen a number of sales fall through because of problems with the lease.

Some leases can also restrict modifications to flats, or at least require permission before you start any building work. So if you want to do that all-important loft conversion or dig out the basement for your bling swimming pool, make sure you ask your solicitor to examine the lease with that renovation work in mind.

Don’t despair if you find a must-have property with a lease of less than 80 years. Assuming your mortgage provider will give you the money, you need a plan on how to extend the lease as the process can take two to six months. Which also means it’s not easy to sell your flat quickly as you may need a lease extension to get maximum value for your flat.

The best place to find advice on extending your lease is the Leasehold Advisory Service (www.lease-advice.org). It’s funded by the Government and offers no- nonsense free advice on leasehold properties.

To extend the lease you must have owned your flat for at least two years. So I would recommend avoiding any flat with less than two years on the lease as you could end up becoming an assured tenant – not the owner of the flat.

That’s not to say you have to wait as some freeholders may be happy to take your cash before that. Most extensions are for 90 to 125 years. When you extend, your ground rent should be waived, further saving you money and increasing the value of your flat when you decide to sell up.