Property prices have fallen in London. Is now a good time to extend my lease?

Good news for owners of short leases.

If you are the owner of a short, or relatively short, lease on a property in Prime Central London (PCL) you should seriously consider extending your lease now.

As we are all aware PCL prices have declined over the last year or two, in particular since the introduction of the punitive Stamp Duty Land Tax rates in 2016 combined with the effect of the Brexit vote and to some degree the election of Donald Trump in the USA.

Irritating as this is for most people there is a silver lining for owners of short leases. As property values decline, the cost of extending the lease reduces.

London is still one of the most highly regarded property markets in the world. The PCL property market will eventually recover and when it does, the cost of extending the lease will increase. As a leaseholder you will be hit with a double whammy of increasing prices and a further diminishing lease term.

Cash held on deposit is currently earning little or no return so an investment in extending your lease makes sense as it makes the property more saleable and right now premiums can be negotiated at a more advantageous price.

Lease extensions improve value of your property and security of tenure and once executed provide a much more saleable asset.

On PCL and Super Prime property, we would also suggest extending the lease a second time as soon as the first transaction is complete, particularly if the original remaining term was particularly low. These second transactions cost considerably less than the initial transaction due to the new lease length and the removal of ground rent liability and can prove to be a wise investment.

Please call or email us for a further discussion of your requirements.