It is the moment to buy more time
Central London property prices have tumbled 25% since the peak of the market and interest rates are now the lowest in the Bank of England's history. It is a very good time for people with a leasehold property to consider extending their lease and if they have cash in the bank, all the more so.
Leaseholders are in the enviable position of being able to capitalise on the depressed property market. The price of extending is directly correlated to the open market value of property generally but your right as a leaseholder means that your landlord is obliged to grant the extension at a fair market value. On this basis, the impact of the "unwilling seller" is minimal.
Bleak economic predictions are causing many to look again at long term safe investments. Property has traditionally been just that but with transactional business slow, good opportunities to buy or sell are proving elusive. If you are lucky enough to be a qualifying leaseholder you could be sitting on the very opportunity you need.
Apart from increasing value in the short term, buying a longer lease buys more choice on an eventual sale. For those with leases with only a short period to run this could be especially valuable. With the prophets of doom predicting 20 to 30 years for full economic recovery it would be comforting to know you could wait until the worst is over, even – let's be optimistic for a moment – until the next property boom.
Given the current abysmal rate of interest on savings, the adage "safe as houses" has gained renewed relevance. Property cycles go up and down and extending your lease in a downturn may be the most sensible investment you can make.
We are as a fi rm pre-eminent in this area and if you would like to find out more about whether you could extend, what would be involved and how much it might cost, please get in touch and we will be delighted to advise.
Katherine Simpson's guide for tenants wanting to extend their leases or buy their freeholds can be seen at http://news.bbc.co.uk/1/hi/business/8029048.stm or by searching for "Katherine Simpson" on the BBC News Website.
Anna Favre, Solicitor
Residential Estate Property Practice
email a.favre@pglaw.co.uk
tel 020 7591 3318