Chances are, in every real estate advertisement or listing, you have seen a point made about years remaining on a lease or the option for extension. Buying or selling, new home or renewing a lease, or even retirement plan housing, you have to make sure of the duration left on the lease and the extensions. After the recent problems facing leaseholders in the UK, leasehold advice is of great importance and in the heart of it could be the years left on a contract.Unlike other factors, this one has always been an issue.
Simply because it doesn’t sound as complicated as issues like sub-letting, Right-To-Manage rules, sinking fund, or ground rate, doesn’t mean that is no longer as important; if not more. With the way British leasehold and freehold rules are structured, properties are under long term lease contracts. Such contracts gets resold or reassigned every time the house or property changes occupier. This results in varying duration, or term, on a leasehold contract which subsequently could also affect other concerns for any leaseholder.Is there a rule of thumb?
More or less, the longer the contract runs the better it is. Other elements and articles on the contract could have much more room for negotiation also, due to the long running nature of the contract. Rent and charges could also be significantly lower in some cases if you have more years in your pocket, so to speak.What is considered ‘long’?
According to most leasehold advice, you should always try going after properties with 85 years or more left on the contract if possible. Anything around this number can be beneficial when wanting to extend, resell, or buy freehold on a property.Mortgage, in relation to a contract duration.
A major talking point right now that can always be found in leasehold advice debates, is the fact that, the more years you have left on your contract, the better chance it is to have more options in mortgaging a house or acquiring loans against it. This is also due to the fact that most banks relate the duration or the grand rate valuation.