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Is now a good time to extend your lease?

The Government wants to make it easier to extend a lease or to buy out the freehold. There are no details yet, but change is certainly on the way.

More than two million homes in England and Wales are held by a lease, with someone other than the people living in them owning the freehold.

But a shake-up is coming. The Government wants to make it easier to extend a lease or to buy out the freehold. There are no details yet, but change is certainly on the way.

So, is now a good time to think about whether to extend your current lease?

Everyone in a leasehold residential property already has the right to extend it and buy the freehold, provided legal criteria are met. But the process can be complicated.

One of the reasons for this is because the cost of a lease is a delicate, expertly-assessed balance between the value of its location and the length of time the lease has to run.

The best advice is to look at your own circumstances when deciding next steps. Whilst waiting for new legislation might be a good idea, any delay adds to the cost of extending an existing lease or buying the freehold.

The extra bill starts in the thousands of pounds, but increasing markedly when leases are less than 65 years, typically adding one per cent of the value of the property to the cost of extending for each year delayed. In other words, a home worth £260,000 can end up with an extra £2,600 of cost each year to extend the lease once the clock is really ticking away.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.