Lease of your worries

Stewart Gray, FRICS, a chartered surveyor at Austin Gray, has 30 years experience in East Sussex as a specialist in his field

Most buyers of flats believe that they have invested their hard-earned cash in bricks and mortar while, in fact, what they have actually bought is paper and ink. It is a constant surprise to me how frequently buyers, and even professional advisors, disregard the very thing they are purchasing – the lease itself. How many flat owners reading this article have spared the time to look at their lease recently? How many know the current length of their own lease? This apparent complacency is understandable, as all too often flat owners and buyers are simply not made aware of the implications of their lease diminishing.

To those less well informed a lease of 75 years might seem to be more than ample for their requirements, while in reality it is worryingly short. Flat owners too often do not give their lease a second thought before finding to their horror that they are unable to sell their flat because it has only 72 years left to run. The problems of saleability as flats get down to this term are simply not publicised widely enough. This is remarkable given that there are around 25,000 leasehold flats in Brighton alone.

The stark reality is that leases of, say, 65 years or less are usually unmortgageable, anything under 75 years is usually un-saleable at market price and even leases with up to 85 years remaining can have real problems selling. As with all remedies, the best advice is to take preventative measures early, well before the costs become unmanageable. Leases above, say, 77 years can be extended relatively inexpensively and afterwards you can rest easy in the knowledge that your investment in your own property is secure for a lifetime. Unfortunately, I continue to meet far too many people who were not made aware of lease problems when the property was purchased and have subsequently been faced with the prospect of huge sums to extend. If you suspect your lease has fallen to around 70-75 years or less then unfortunately it is a problem and will probably be expensive to rectify. The costs can spiral year-on-year as the term gets shorter, so acting sooner rather than later will always be the most cost effective remedy you can take.

Some freeholders are quite happy to offer you a lease extension for a fair price. If you have a short lease you should consult a specialist surveyor to provide you with a valuation and help with negotiations. Usually deals can be done informally but if all else fails you have a legal right to an extension providing you have owned the flat for two years. Some freeholders (not all) will place overly high asking prices on lease extensions but most will be prepared to haggle with your surveyor.

Legislation is in place to ensure that flat owners have the right to extend for a reasonable figure but the valuation methods are complicated and the procedure can be confusing. If you are quoted a price by your freeholder it is essential to get an independent expert opinion from a specialist surveyor so that you can be sure the price and terms are fair.

Austin Gray provide a free drop-in clinic (details below) at which you can discuss any concerns you haveconcerning leasehold property or to help you start the lease extension process.