Almost all flats in england and Wales are "leasehold", meaning they are owned under rules set out in a lease of the property.
Leases only last for a specific number of years, called a "Term" and then they expire - meaning that as a lease goes on it has less and less years left on it. This in turn causes the value of the property to decrease as time goes on.
You can usually extend your lease for a price, but the later you leave it to extend your lease the more it costs. If a lease runs to below 80 years left then the price to extend it rises more steeply after that point. Mortgage lenders have strict rules on the minimum length of lease they will lend against, so that they aren't caught out by a short lease reducing the value of the property they lend against.
Because of this, if your lease runs down to around 85-90 years it is likely that when you come to sell or remortgage you will get enquiries from buyers and lenders asking you to extend it.
If a lease ever ran out, then unless you have acquired additional rights to stay in the property it would go back into the ownership of the "landlord" or "lessor" of the lease, often that is the person who owns the freehold of the building.
It is important to extend your lease to keep it marketable, and a long lease can be a real selling point.
There are two ways of doing this:
Informal lease extension
This means going to the "landlord" or "lessor" of the lease - usually the person who owns the building it is in, and agreeing a price with them. Often they will be willing to lower the price in exchange for giving you less years, or raising the ground rent you pay to them each year.
When doing this it is vital to make sure that the terms you agree don't make your property harder to sell or out of line with modern mortgage lender's requirements.
Formal lease extension
After owning a flat for two years under a long lease, you are very likely to qualify for a specific right to extend your lease by making a claim to the "landlord" or "lessor" for a lease extension.
Extending your lease this way means you will add 90 years to the years you have left, and you won't pay any ground rent after you have completed the process.
What Thackray Williams do
Our specialist team deal with lease extensions daily, and can help you pursue either type of extension, combinations of the two methods, or even tying in a lease extension with another transaction, like a sale of the property or a remortgage.
We can help you weigh the advantages and disadvantages of each method and choose the right one for you, and then act for in ensuring the documentation to extend your lease does everything you need it to, avoiding any hidden problems and making sure your property stays marketable.