The Independent has recently reported on the release of information by the London School of Economics and Political Science (LSE), that property owners living in lease-holding homes are being asked to pay exorbitant prices to extend their leases. The LSE has examined data from over 8,000 homes with lease sales which showed how the sale varied depending on how much time the lease had left.
The cost of extending a lease is down to a concept called relativity, which describes how the value on a property decreases as the lease runs out. The lower the relativity, the higher the cost will be to extend the lease. With this concept, it can have an impact on the cost of leases, as it is expressed as a percentage, it’t the difference in value between a short lease and a home with a lease of 999 years and low, fixed rents. The lower the relativity is, the more it costs to extend the lease.
However, the article goes on to mention that the information gathered by LSE that the current practices underestimate the value of leases when they have less than 70 years left. This means that when leaseholders want to extend their lease on their properties, they could be paying thousands of pounds more than expected. The Independent welcomed comments from James Wyatt, one of the authors of this research as well as a chartered surveyors, who said: ”Our findings mean that many leaseholders may be seriously overpaying for lease extensions. Our alternative, evidence-based calculations could result in savings in the order of thousands of pounds for most leaseholders, and much more for owners of some of the most expensive properties.” All this follows scandals that have hit leaseholders in the past, including being overcharged, under-informed and even exploited.
As we live in an ever-changing economic climate, it is not hard to imagine that the housing sector will have its fair share of ups and downs in various areas, including the leasehold sector. Buyers of leasehold properties have been rocked by revelations that companies such as Taylor Wimpey had been adding clauses to properties with 999-year leases by doubling ground rent every 10 years, denoting that they incurred notable additional costs within a few decades, having an impact on their sale value. Campaign groups have waded in and have forced Taylor Wimpey to act, announcing….
To Read more you can visit the full published report athttp://www.primepm.co.uk/leaseholders-paying-more-than-expected-to-extend-leases/
Source: Property Management London
The cost of extending a lease is down to a concept called relativity, which describes how the value on a property decreases as the lease runs out. The lower the relativity, the higher the cost will be to extend the lease. With this concept, it can have an impact on the cost of leases, as it is expressed as a percentage, it’t the difference in value between a short lease and a home with a lease of 999 years and low, fixed rents. The lower the relativity is, the more it costs to extend the lease.
However, the article goes on to mention that the information gathered by LSE that the current practices underestimate the value of leases when they have less than 70 years left. This means that when leaseholders want to extend their lease on their properties, they could be paying thousands of pounds more than expected. The Independent welcomed comments from James Wyatt, one of the authors of this research as well as a chartered surveyors, who said: ”Our findings mean that many leaseholders may be seriously overpaying for lease extensions. Our alternative, evidence-based calculations could result in savings in the order of thousands of pounds for most leaseholders, and much more for owners of some of the most expensive properties.” All this follows scandals that have hit leaseholders in the past, including being overcharged, under-informed and even exploited.
As we live in an ever-changing economic climate, it is not hard to imagine that the housing sector will have its fair share of ups and downs in various areas, including the leasehold sector. Buyers of leasehold properties have been rocked by revelations that companies such as Taylor Wimpey had been adding clauses to properties with 999-year leases by doubling ground rent every 10 years, denoting that they incurred notable additional costs within a few decades, having an impact on their sale value. Campaign groups have waded in and have forced Taylor Wimpey to act, announcing….
To Read more you can visit the full published report athttp://www.primepm.co.uk/leaseholders-paying-more-than-expected-to-extend-leases/
Source: Property Management London