A property with a short lease extension can drastically affect the value of your abode and the lower the lease continues to drop, the bigger hit you'll see in the property price when you come to sell.
Once it drops beneath 80 years, it can significantly reduce the value.
This is because it becomes far more expensive and difficult to lengthen the lease after it drops below this mark, making it a lot less appealing to potential buyers.
The reason for this is once it goes below this point you'll be required to pay 50% of the flat's 'marriage value' to extend the lease.
The marriage value is basically the extra property value you'd gain by extending the lease or collectively doing purchase freehold with the other tenants that share your lease (known as collective enfranchisement).
This could represent a substantial amount, so it's wise to consider lease extension before you get near the 80-year threshold.
Who's allowed to extend a lease?
You must meet certain requirements before you're able to extend a lease, including owning the property for at least two years.
Bear in mind that could become a problem if you want to buy a flat with between 80 and 82 years remaining on the lease - consider asking the previous owner to begin the lease extension process as a condition of the sale.
If you're considering buying a leasehold flat, you can call London & Country for fee-free, independant mortgage advice on 0800-073-1959, or request a call back
Also the property can't be used for commercial or business purposes and the landlord can't be a charitable housing trust either.
Cost of extending your lease
There are few different elements which will help determine how much it will cost to extend the lease on your property.
This includes the length of the remaining lease, the value of your property and any ground rent that you currently pay. If you've made any improvements to the property while you've owned it, this will also be reflected in the cost of extending the lease.
The closer the lease gets to 80 years, the more expensive it is to extend.As well as this, you also need to take into account the legal fees involved and the cost of the property valuation - a surveyor will need to come your property and value the lease extension. Updates to the Land Registry will also need to be paid for.†