Should I wait to extend my lease? Freehold and Leasehold Reform Bill.
Should I Wait to Extend My Lease?
The Leasehold and Freehold Reform Bill has introduced significant changes that could impact your decision on whether to extend your lease now or wait. This article summarises the key aspects of the proposed changes and how they might influence your choice.
The new bill aims to make it easier and cheaper for leaseholders to extend their leases or buy their freehold. One of the most notable changes is the increase in the standard lease extension term to 990 years for both houses and flats, up from the current 90 years for flats and 50 years for houses[1]. This means that leaseholders can secure long-term ownership without the hassle and expense of future lease extensions.
Another significant change is the removal of the so-called “marriage value,” which makes it more expensive to extend leases when they are close to expiry[2]. This change is particularly beneficial for those with short leases (less than 80 years), as it is likely to make lease extensions cheaper once the relevant part of the Act is in force.
The bill also proposes greater transparency over service charges, making it easier for leaseholders to scrutinize and challenge these charges[1]. Additionally, it will be easier and cheaper for leaseholders to take over the management of their building, allowing them to appoint the managing agent of their choice[2].
Given these proposed changes, it might be worth waiting to extend your lease until the new provisions come into effect. The increased lease extension term and the removal of marriage value could result in significant cost savings. However, until the full details of the changes are known, there remains uncertainty. However, if your lease is already very short or a ‘problem ground rent’ you might want to consider extending it sooner to avoid any potential complications or increased costs in the interim. Furthermore, if you are looking to sell or re-mortgage your property now, or in the near future, you may not have the luxury of waiting.
In conclusion, the decision to extend your lease now or wait depends on your specific circumstances. If you have a short lease or issues with your ground rent, it might be prudent to act sooner rather than later, especially if you are looking to sell or re-mortgage. However, if your lease still has a considerable number of years left, waiting for the new provisions to come into effect could be financially beneficial.
[1]: HomeOwners Alliance [2]: GOV.UK
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