Why do I need a lease extension? Diminishing asset


One of the drawbacks of owning a long leasehold flat or maisonette is that it is a diminishing asset. The fewer the number of years that remain on the lease, the less valuable it becomes and the harder it is to sell.


80 years or less remaining?


The tipping point is 80 years because historically banks required at least 50 years left on a lease after a mortgage term comes to an end (typically 25 to 30 years), although the lending threshold has increased from lender to lender in the last decade. It is also at the point of 80 years remaining that the leaseholder will have to pay ‘marriage value’ to the landlord in addition to the extension premium, which increases the cost that will need to be paid to the landlord for a lease extension.


“It is especially important for leaseholders to act upon extending their lease when the unexpired lease term is approaching 80 years as this is when the costs involved begin to escalate.”


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