With the current downturn of the property market, many home owners are concentrating on making improvements to their properties in order to make them more appealing to purchasers either now or when the market picks up.

As well as the usual list of DIY improvements such as redecorating and new kitchens, people should not overlook the legal issues that could be ironed out prior to selling. One issue is the legal tenure of leasehold properties that could have a big impact on the saleability of your home.

Many people, in particular flat owners, own their flat as a leasehold property, and the freehold is owned by a separate ‘landlord’, often one of the traditional estates or landowners in your area.

If your lease has less than 70 years remaining it is considered a short lease and far less desirable to buyers. Indeed, many mortgage lenders will refuse to lend on a property with less than 70 years on the lease and, as you may well be aware, lenders are becoming increasingly sensitive to lending in the current market.

Furthermore, buyers will be more reluctant to invest in a property if they are likely to be liable to fees later on for extending or renewing the lease.

If you have a short lease you have two options – either to pay for an individual lease extension which will give you 90 additional years on your remaining unexpired lease plus reduce your ground rent to a peppercorn rate, or collectively purchase the freehold with other flat owners in you block. If you collectively purchase the freehold (a process called enfranchisement) you own a share of the freehold with the other participants in your block and can together choose to extend your lease to 999 years as well as take over the management of the block and decide some of the terms of the lease yourselves. Obviously this is the most beneficial route but can cost more overall. It can also be more difficult to achieve and take longer as you need at least half the other flat owners to be involved.

The main thing to be aware of is that the cost of both extending the lease or buying the freehold increase significantly with each year that passes. However, one advantage of doing it when the market is experiencing a downturn is that the valuation of the lease and subsequent cost of the freehold purchase or lease extension may be lower.
Eighty years is a key threshold to remember. Ideally if you can extend your lease prior to the 80 year mark lapsing on your lease then you will find it significantly less costly but, every year after, the cost of either process includes a element which reflects the current market valuation of the property. The sooner you act the better as it becomes a bit of a downward spiral, in terms of cost, the less time that remains on your lease. Now might be as good a time as any due to the current housing market.

At Coles Miller solicitors, we have a specialist team, one of only a handful in the South, who can assist with leasehold and freehold issues. To contact us telephone 01202 293226 or email landt@coles-miller.co.uk