Earlier this month, Mortgage Introducer wrote that secured loans can help homeowners avoid the threat of negative equity following research from e.surv which claimed 1.43 million homes in England and Wales were at risk.
Eddie Goldsmith, senior partner at Goldsmith Williams, explained how the problem of expiring leases has become more widespread.
He said: “Since the eighties new build properties have been commonly sold on 99 year leases rather than the 999 year leases that were previously more commonplace. So properties first sold in the eighties now have less than seventy years remaining on that lease. What potential buyers often don’t realise is that once a lease has less than eighty years to run the value of the property begins to fall.”
Goldsmith said what is more worrying is that properties with less than sixty years remaining on the lease will fall in value rapidly.
He said: “Alongside any lending considerations the broker also has an opportunity to offer the client some welcome help in addressing the legal implications of this situation.”
Legislation exists that sets out statutory routes for both house owners and flat owners to either extend their lease terms or to acquire their freeholds, collectively with others in the block if a flat owner.
Many clients will take up an opportunity to engage in a private negotiation with the landlord when this is offered but doing so may not be in the client’s best interests as the offer by the landlord is unlikely to reflect the best price the client could achieve for the lease extension or freehold purchase.
Goldsmith said: “Pursuing the statutory route by engaging the services of a law firm would mean that the client is much more likely to benefit from a fair price for this purchase.
“Brokers can offer clients both guidance and reassurance in selecting a law firm that offers these additional services.
“In a competitive market place successful brokers who stand out from the crowd will be those who look at their clients’ requirements in the broadest possible sense and offer a comprehensive, personalised service.This holistic approach could provide a further point of differentiation in a tough marketplace.”
