Most people hope that when they buy property its value will go up.Unfortunately, when you buy a flat, or indeed any leasehold property, its value can go down instead as the years go by and the lease gets ever shorter.

Indeed, if the length of the lease is edging dangerously near to 80 years, the value of the flat will rapidly decrease.In the old days, this was a severe drawback to leasehold homes, and meant that anybody who had a choice, bought freehold properties instead. Another serious drawback to buying leasehold flats was the often difficult relationship with the freeholder.

Although all leases state that the freeholder has a duty to keep the property in good condition, this clause was frequently broken by freeholders who could no longer afford to maintain the building, who could not be bothered, who simply disappeared and went away or waited for leases to run down so that they would own the building again.These factors are the main reasons why, eventually, even originally valuable flats lost a lot of value. It is still quite common to find leases of 54 years or less on older blocks, and the long-term residents have no idea their property is worth virtually nothing until they come to try to sell. But where the lease is less than 80 years, you cannot sell your flat – or at least, only for a knockdown price to a cash buyer. 

But fear not! There are now three ways of increasing the value of your property, even when the lease is getting short, the common parts are run down and the freeholder has absconded or completely lost interest in the building.

The Options Are:

All these are options you can force your landlord or freeholder into doing. There are exceptions for some kinds of property, but in the main, anybody who lives in a leasehold property can exercise one or all of these steps, which increase the amount of control you have over your own property.

But although you can extend your own lease individually and without reference to the other residents, in order to buy the freehold or exercise the right to manage, you need to take collective action, and get a majority of residents on your side. This is not always easy, especially as collective enfranchisement can cost each leaseholder a lot of money which, they feel, may not be realised in extra value on the fiat.

There is also a common attitude among older residents that the lease, however short, will ‘see them out’ and they may not want to spend their remaining savings on something that may only benefit their heirs or, more likely these days, the taxman.

Where this is the case, it may not be possible to get enough support to enfranchise, and extending your lease may be the only answer.

What You Need To Know Before You Buy

Whenever considering buying a leasehold property, first look at the length of the lease on the agent’s particulars. If this information is not there, as is often the case, ask before going any further with the purchase. When the lease is 80 years or less, ask whether this term can be extended, and about how much it would cost. Very often estate agents fudge the length of the lease by putting something like ‘lease 125 years from 1986’ or something, which may lull you into a false sense of security.

Although buyers can now legally force the freeholder to grant them a 90-year lease extension on most types of leasehold properties, not all leases can be extended. Specialist properties such as those held on crown leases, National Trust properties, and those within cathedral precincts are exempt from this legislation. But, in practice, few people are likely to live in these apartments.

In any case, freeholders of these properties have expressed a desire to go with the prevailing legislation, which means that in practice, crown leases, for instance, often can be extended. So, if you are considering buying one of these ‘exempt’ properties, find out what the leasehold/freehold/lease extension situation is before buying.