I was asked by Martin Wardle, a Partner at Robson Laidler Accountants, to speak at their latest property conference on 3 July 2013, held at Sage UK, Great Park.
The conferences are always well attended and include a large number of property investors, as well as other professionals and suppliers to the property industry. I had spoken previously at the February 2012 conference on the issues of 99 year residential leases and how leasehold property owners need to be aware of the issues surrounding these. That presentation was well received and, as a result, I was asked to speak again with an update and explain further the options available.
I began by highlighting that flats and houses which were sold on a leasehold basis in the 1960’s, 70’s and early 80’s will now have less than 70 years remaining and as increasing numbers of mortgage lenders are not prepared to accept properties with less than 70 years left on a lease as suitable security, owners need to be aware of this and deal with the matter as soon as possible, and certainly well before any sale is contemplated.
During the presentation, it was explained how a leasehold property is a wasting asset and that as the length of the lease shortens, so the value of the house or flat reduces. However,it was demonstrated that by a house owner buying their freehold, or a flat owner extending their lease, additional value can be added to their property. This does of course rely on the correct premium being paid for this benefit and expert valuation advice is essential to avoid overpaying. This is especially important as many of the specialist ground rent companies who own the freeholds will invariably quote high prices.
I explained how this can be likened to a Leasehold Timebomb and reiterated the need for leaseholders to be aware of the issues of shortening leases and to deal with them as soon as possible.
If you think you are affected by this, then please get in touch.
With thanks to Angela Carrington at The Bigger Picture for use of the photograph from the conference.