Leasehold Reform & Litigation: Protect your nest egg

Posted by Knight Frank Newcastle on 15th May 2020 -

Is your lease heading towards the 80 year threshold where it becomes a lot more expensive to extend? Or perhaps your lease has already fallen short of 80 years. In either case, for every year that goes by, your lease is getting shorter and less valuable because it’s a diminishing asset. 

As a surveyor working in the Leasehold Reform & Litigation team, my job is to protect the value of your property making it more marketable when you want to sell. How do I do this? I work out what price someone should pay to extend their lease or buy the freehold.  

Alternatively, if a freeholder receives Notice where a leaseholder is applying for an extension or wanting to purchase the freehold, I can also make sure you the freeholder is adequately compensated. 

Since the arrival of Covid-19, Knight Frank Research has predicted that house sales in the UK will collapse this year as the coronavirus pandemic puts the property market into a deep freeze. However, prices will fall by only 3% and will rebound next year.

The relatively finite timespan of the current crisis means that declines are anticipated to be limited. We expect that prices will recover sharply in 2021 and have pencilled in 8% growth for prime central London prices for next year. 

Waiting for the market to improve before extending your lease or purchasing the freehold, coupled with the fact that the lease is a diminishing asset, could increase the cost substantially. The lower the number of years and the higher the value of the property, the higher the cost. Therefore, it is sensible to make a claim now before the market rebounds.

When extending your lease we can provide you with advice not only as surveyors - regarding what you should be paying or receiving for a lease extension or freehold purchase - but also as brokers, in terms of how you can finance this. 

Richard Fulchiron is a broker for Knight Frank Finance and has been working with our team for a number of years and therefore has a wealth of knowledge when it comes to financing lease extensions and the acquisition of freeholds. 

Richard provides this insight on the mortgage market: “We’ve seen an increasingly positive response from lenders to the Covid-19 outbreak. Though many have overhauled product lines and imposed restrictions on lending criteria, some continue to lend at higher Loan-to-Values (LTV) and others are being innovative with bespoke lending.

HSBC, for example, continues to remortgage up to 90% LTV and applications are still being accepted at 95% LTV, though the availability of those deals is subject to demand. If you need a mortgage or to remortgage, it’s worth checking to see what’s possible. Knight Frank Finance can help you understand the options available right now.”

If you are a leaseholder or a freeholder with a claim, or if you require any additional advice, contact the Leasehold Reform and Litigation team today.

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