Slower housing market could boost leasehold extensions - claim

The slowing housing market may have at least one benefit for leaseholders looking to sell their homes, a property lawyer claims.

House prices data suggests prices have been falling on a monthly basis recently but Amber Krishnan-Bird, property solicitor at Osbornes Law, has suggested this could be a good opportunity for leaseholders to extend their lease at a lower cost and therefore boost the value of their property.

Krishnan-Bird said: “While the predicted property slump is bad news for homeowners generally, it can offer a silver lining to leaseholders.

“Extending a lease can add potentially tens of thousands of pounds onto a property whatever the state of the market, allowing leaseholders to buck the trend and continue to add value to their homes in a difficult housing market.

“Indeed, when property values are lower it is the perfect time to consider extending a lease as it is usually cheaper to do so. We are seeing more and more homeowners coming to us for this service.”

Krishnan-Bird said that any homeowner whose lease is less than 90 years should immediately consider extending it, adding: “Regardless of adding value to a property leaseholders should seriously consider extending their lease when there is between 80 and 90 years left. If a lease drops just one day below 80 years, then this is a real danger zone as it will mean it will be a lot more expensive to extend. 

“This is because something called ‘marriage value’ kicks in. The marriage value is the increase in value of the property once the lease has been extended, and the bad news is that leaseholders need to pay the freeholder half of this figure.”

Another way of increasing the value of a property is by extending or improving a home but she warned many leaseholders don’t realise that they are restricted in what they can do to their property, depending on the terms of their lease.

She added: “I am seeing more and more leaseholders fall foul of this and having to get costly retrospective consent from their freeholder.”