23 February 2018 by Leah Veasey

Don’t get shackled with a flat with less than 80 years left on its lease and pay Marriage Value

You’ve purchased a flat, you’re a home-owner, hurrah! But how long is left on your lease? 125 years? 99 years? 80 years? During the term of the lease, the flat can be bought and sold and will often change hands a number of times. But the term does not renew and as such, as the years go by the lease will reduce in length.

An unexpired lease term of 80 years is considered to be somewhat of a magic number! This is because in law when the unexpired term of a lease falls to below 80 years then the value of your property may fall and the expense of doing something about it rises considerably.

In most cases what you need to do is to go to your landlord and extend the term of your lease. There will be a cost to you to do this but this will, in most cases, be much less than the value you would lose otherwise and in fact you are likely to add value!

If, however, the lease has less than 80 years left then the landlord is entitled to half of the increase in the value to the property (this is known as the “Marriage Value”), as well as charging you a fee to allow you to extend the term.

Furthermore, not only does a lease term of less than 80 years make for a more expensive lease extension, you might also find that you struggle to gain the approval of a mortgage lender. Lenders differ in their lending criteria, however some simply will not lend on a flat with less than 80 years remaining. Others may seem more lenient and may lend on leases with as little as 70 years remaining, but you may instead find yourself shackled by higher interest rates or a shorter mortgage term. Your lease is a diminishing asset and with time it will become less attractive to both mortgage lenders and potential buyers.

So, what can you do about it? Act now!! Firstly look at your lease and see how long is left. If you think your lease is sitting pretty at 84, 83, or 82 years left to run, act now and extend your lease; do not get complacent.

Should you need assistance with extending your lease or just want to know whether you are at risk of paying marriage value, please contact us and we will be delighted to help. Better yet, take advantage of our free Drop-In Clinic, hosted at our offices on Tuesday 27th February and Thursday 1st March 2018, we hope to see you there!

If you have any queries regarding this article, then please contact Leah Veasey in the Enfranchisement Team on 020 7288 4708 or email her at LeahVeasey@boltburdon.co.uk .

Alternatively, you can also contact one of our other solicitors in the Enfranchisement team here.

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