The possibility of short-term falling house prices caused by Brexit may be good news for the UK’s four million leasehold flat owners, claims a leasehold enfranchisement firm.
Leasehold Solutions says flat owners to extend the length of their leases now, in order to protect the full value of their properties in the long term.
“The difference between a property’s value when notice is served to when negotiations conclude is used to calculate the cost of a lease extension. So, when prices are falling, canny flat owners should serve notice to extend their lease now, because the cost of the lease extension will have fallen by the end of negotiations” claims Louie Burns, managing director of the firm.
“We expect that the slowdown in house price growth will be a short-term blip, so once the property market recovers, these flat owners will benefit from the win-win of securing a cheaper lease extension and rising property prices.”
The value of leasehold flats and their marketability are affected by the number of years the lease has left to run.
The underlying value of the flat declines as the lease length reduces, and drops significantly once the lease falls below 80 years; apartment owners have a legal right to extend their lease by an additional 90 years and reduce the ground rent to zero if they have owned their flat for more than two years.