In the wake of Brexit, there has been a slew of news stories about how the referendum, has, might, and will change the housing market, so much so that it's almost impossible to keep on top of all the developments. From news that the Bank of England base rate would remain stable, before it eventually dropped, to news that residential mortgages were unlikely to change in the short term. Between Brexit and stamp duty changes, the housing market has been in a state of flux for last few months, shifting between positive and negative news.
Today, however, we have some positive news, especially if you're a leasehold flat owner!
According to Leasehold Solutions, a leasehold enfranchisement firm, the short-term fall in house prices in the wake of Brexit could be good news if you’re one of the 4 million people in the UK who own a leasehold flat.
The company is encouraging flat owners to extend the length of their leases, as it could fully protect the value of their property in the long-term!
The reason for this, according to Louie Burns, the company’s managing director, is due to how the property’s value is calculated in relation to the remaining time left on the lease, and how the cost of renewing the lease is calculated.
The cost of a lease extension is figured out by calculating the difference between a property’s value when a notice to extend a lease is served and the end of negotiations. That means, with property prices falling, as they are now, it is the perfect time for leaseholders to provide notice to extend the lease because by the time negotiations have concluded, property prices, and therefore the cost of renewing a lease, will have dropped.
This creates a win-win situation because housing experts believe that this fall in property prices is just a temporary blip, and property prices will begin to increase again shortly. Therefore, once the market has recovered, leasehold flat owners will have benefitted from renewing their leases at a much lower cost than they otherwise would have been able to, and they will be seeing the benefit of rising property prices!
Renewing the lease now is also important because the value of a leasehold flat decreases as the length of the lease shortens. Typically, a flat’s value decreases dramatically when the length of the lease drops below 80 years, but flat owners can extend their lease by 90 years, and reduce ground rent to zero if they have owned the flat for more than 2 years, which makes now an opportune time to renew a lease.If you’re looking to buy a new flat, house or apartment in Cardiff, as one of Cardiff’s largest letting and estate agents, we have hundreds of properties available in areas including Cathays, Cardiff Bay and Pontcanna. For more information, visit us in one of our three branches in Cathays, Roath or Cardiff Bay, contact us online, or email us at: email@example.com.