Only qualifying leaseholders can take part. A qualifying leaseholder requires a long lease, which is generally:
- A lease for a fixed term in excess of 21 years when first granted
- The continuation of a long lease under the Local Government Housing Act 1989 following the expiry of the original term
- A shared ownership lease where the leaseholder’s share is 100%
Even if the leaseholder satisfies the above criteria, he or she will not be a qualifying leaseholder if any of the following cases apply:
- The landlord is a charitable housing trust and the flat is provided as part of the charity’s functions
- The leaseholder owns more than two flats in the building
- The leaseholder has a business or commercial lease
- There must be a minimum of two flats in the building
- At least two-thirds of the flats must be leasehold
- No more than 25% of the internal floor area to be in non-residential use
As your lease term decreases, there are associated negative implications that you should be aware of. This can include difficulties in selling or re-mortgaging as well as the decreasing value of the property itself.
However, as a leaseholder or shared owner, you may have the opportunity to add a further 90 years to the existing term of your lease. This is known as a lease extension. A premium will be payable to Hyde to do this.
The potential benefits of extending your lease now include the following.
Easier to re-mortgage
Mortgage lenders are more willing to lend on longer lease terms. Where there are less than 80 years remaining, it may be deemed that there is inadequate security for a loan.
Easier to sell
A short lease term is likely to make the property less attractive to potential buyers.
The value of your home is protected
The value of the property would fall when the remaining lease term is low as the assist is diminished.
Premium payable will increase over time
The increase in premium is two-fold:
- In general terms, the greater number of years left on the lease, the cheaper the amount payable to extend it.
- As house prices rise in the future, the premium rate would subsequently increase as well
No more ground rent charge
Once the extension is complete, the annual ground rent charge will revert to £0.00 for the remainder of the term.