Taylor Scott International News
Property owners in the UK who are leaseholders do not know enough about how the system works and much of this is down to poor advice from conveyancing solicitors, it is claimed. They have a ‘shocking’ lack of understanding on how leases work, how they can be extended and the consequences of failing to extend a short lease, says research from law firm Bolt Burdon Kemp. The survey found that over half of leaseholders are unaware of the crucial 80 year rule that once the time left on a lease falls below 80 years, the extension will immediately cost thousands, sometimes hundreds of thousands of pounds more. Almost all flats and apartments in England and Wales are leasehold property yet a fifth of leaseholders are aware that they have leases with less than 80 years left to run and therefore face hefty bills to extend but 36% do not know the length of their lease at all. The majority of leaseholders are unaware they can extend their lease after two years of ownership and overall the situation is a time bomb, according to the firm. The firm points out that a lease with less than 80 years left steadily becomes less valuable, leaving the property owner with a diminishing asset that they may be unable to sell or mortgage. The survey also reveals that many respondents were not given basic information about the importance of lease length and renewing the lease at a time when the number of leasehold owners has increased. Indeed, it points out that buying a leasehold can be fraught with issues and the lack of knowledge can create an avoidable and very expensive problem for home owners further down the line. ‘It is clear from these results that leaseholders are simply not being given enough information by their professional advisors before buying flats and apartments. This is creating a ticking time bomb for many leaseholders,’ said Stephen Hill, partner at Bolt Burdon Kemp. ‘Not knowing the length of your lease or the impact if it falls below 80 years is very serious, it could mean you struggle to sell the property or renew your mortgage. Solicitors and conveyancers advising leaseholders must do more to ensure property owners are fully aware of what they are getting themselves into when they buy a lease,’ he added. The current law states that after an unexpired term of a lease drops below 80 years, the way that the cost of a lease extension is calculated changes. When a lease is extended, the freehold becomes less valuable. It is only if the lease has less than 80 years to run when you extend it that the law requires you to pay the owner of the freehold compensation for the lost value. If there are more than 80 years left to run on the lease, no compensation is payable and the cost will usually be minimal. With each year that passes below 80 years, the lease becomes increasingly… Taylor Scott International
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