What Are The Benefits of a 999 Year Lease?

There are real benefits to extending your lease

There are significant financial benefits to extending your lease. When you acquire a property with a 999 year lease it enables the flat owner to have a title that is ‘as good as freehold’ and therefore more marketable and attractive to buyers, if you are ever thinking of selling in the future.

The general consensus is that having a 999 lease can add between 5% -7% to the value of the property.

There was a recent incident where one of our leaseholders wished to sell their flat and their purchaser refused to proceed until the lease was extended. The lease still had 102 years left, but the buyer, and more importantly their mortgage lender, was not willing to grant a mortgage on a property with what they regarded as a short lease.

It cost how much!!

This was done at a considerable cost. There is usually a charge to extend a lease of £15,000 - £20,000.

Another view is that the cost of extending a lease is generally 50 percent of what is known as the ‘marriage value’ of the property – this is defined as the extra value the property would gain by having a longer lease. In other words, you will be paying around half the extra resale value you would (theoretically) gain when you sell.

Put simply, acquiring a 999 year lease enables a flat owner to have a title that is ‘as good as freehold’ and therefore more marketable than for example a 85 year lease.

The leases will also give the flat owners rights and obligations in respect of each other, which protects each other’s interests. For example, if a neighbour is committing a nuisance by playing music loud during the early hours of the morning, the lease would in most cases prohibit this, and therefore provide a cause of action and means of putting things right.

For these reasons it is common for flat owners with a share in their freehold company to grant new 999 year leases upon acquiring the freehold. It is also a good opportunity for a lawyer to review the old leases and bring them up to date as well as correcting any defects, whilst extending the lease term.

Leasehold vs Freehold

If you are still struggling to get your head around it we found this great article Leasehold vs freehold: what's the difference?

Our recommendation

If you are ever offered the opportunity of extending your lease do talk to your Block Manager and take time to consider the longer term benefits and assess whether the initial payment of admin charges, solicitor fees and premium charge.