Lease Extensions

Clients are starting to contact us about extending their leases. This evidently a growing problem, which is affecting an increasing number of people in Milton Keynes . The addresses that have most regularly come to our attention are in:
  • Rowle Close, Stantonbury;
  • Clay Hill, Two Mile Ash;
  • St Margaret’s Court, Bletchley;
  • Bute Brae, Bletchley; and
  • Caithness Court , Bletchley.
  • Inevitably the list is going to get longer.

The problem is this. Mortgages are increasingly repayable over 35 years. Mortgage lenders expect to lend on a lease that is at least 30 years longer in duration than the mortgage term. So a lease with 65 years left to run is often the minimum that will be acceptable for mortgage purposes. Given that, on average most people move at least every 7 years most buyers will want to see not less than 72 years on the lease before they buy so that they have 65 years or more on the lease when they come to sell.

Many of the leases we are now seeing were granted around 1980 and often earlier than that. Mostly they were granted for a period of 99 years. The mathematics is simple. With 30 years now having elapsed the leases have less than 70 years left to run.

If you have a lease with less than 70 years left to run and have owned your property for more than 2 years you can ask your landlord to extend the lease. It comes at a cost however. Landlords generally know that if they cannot agree a price for the lease extension the tenant can have the figure set by the Leasehold Valuation Tribunal (LVT). They tend to be realistic therefore it also means that there is very little likelihood of the landlord accepting a counter-offer. Why should they? An application to the LVT can be very expensive for a disgruntled tenant. If the tenant doesn’t accept the landlord’s offer and cannot afford a challenge the only option is to decline it. The lease however continues to get shorter by the day. As you might expect, the shorter the lease the more expensive the cost of extending it becomes.

Our advice is always to be realistic about the cost of lease extensions and act sooner than later because delaying will cost more money. Sometimes the cost simply cannot be found. In that event we would suggest selling sooner than later and entering into a contract with the buyer that allows the seller to obtain the lease extension by paying for it with the buyer’s money.