Why extend your lease?

Put simply, as a lease becomes shorter, it loses value and the property can become more difficult to sell. There are two notable trigger points that exacerbate these issues. When the remaining term of the lease falls below 80 years the cost of a lease extension starts to rise significantly. This is because an additional calculation factor known as “marriage value” will be added to the cost of any extension once this point is reached. A lease with less than 80 years to run will often be referred to as a “short” lease as a result and this additional cost will continue to rise rapidly the shorter the lease becomes.

The impact on the saleability of your property, however, becomes even more acute if the outstanding lease falls below 70 years. The issue here is that most high street mortgage lenders will refuse to lend against a property which has less than 70 years remaining on the lease, severely restricting the number of potential purchasers of the property.

It is therefore definitely in your financial interest to consider extending your lease no matter what the outstanding term but especially if it is getting near to the 80 year threshold.