Why Now is the Perfect Time to Extend Your Lease

Mary-Anne Bowring, Managing Director of Ringley and Governor of the Institute of Residential Property Management (IRPM), explains why extending your lease is a smart move in today’s market. With the UK housing market in a downturn, extending a lease has become more affordable, presenting a unique opportunity for property owners.

The Impact of a Short Lease on Property Value

Properties with short leases—typically under 80 years—start to lose value and become harder to sell. Mortgage lenders usually won’t approve loans on such properties, which requires owners to extend their lease to avoid significant depreciation in property value.

How the Economic Downturn Makes Lease Extensions Cheaper

As property values fall, the cost of extending a lease decreases. For example, extending a 60-year lease on a £198,000 property would have cost around £26,900 before the market decline, but now it would only cost about £24,600, making it an affordable option for homeowners in the current economic climate.

The Benefits of Extending an 80-Year Lease

Extending a lease with 80 years remaining is often cheaper and does not require payment of marriage value. For instance, extending an 80-year lease on a £198,000 flat before the market fall would have cost around £6,400, but it’s now priced at about £6,000. This option is still an excellent investment in a declining market.

Why It’s Smart to Extend Your Lease Before It Reaches 79 Years

If your lease is nearing 80 years, it’s essential to extend it before it drops to 79 years, as the premium for extension will rise significantly. By extending your lease now, you avoid paying a higher premium in the near future and secure better financial terms.

Key Tips for Extending Your Lease

To successfully extend your lease, start by gathering information about your current lease and ground rent. Consult a qualified surveyor to assess the lease extension options, and remember that you are entitled to extend your lease by 90 years with no ground rent. Be sure to register the deed of variation at HM Land Registry to ensure the extension becomes part of your property’s title.