The Government has recently announced its plan to tackle abuses in the leasehold system and to make extending a lease “much easier, faster and cheaper”. So why should Watford property owners consider extending their lease?

1) A lease is a diminishing asset: it gets less valuable as it becomes shorter. Any lease with less than 80 years left is regarded as short. As the lease becomes shorter, it becomes more expensive to extend.

2) You have the right to a lease extension if you have owned your lease for a period of two years or more, and your lease was originally granted for a term of 21 years or more.

3) A short lease will make your property harder to sell. You will need a good solicitor who can start the lease extension and assign the benefit to your buyer.

4) Remortgaging your property can be difficult when you have a short lease. You shouldn't allow your lease to fall below 80 years as the cost of extending it increases sharply once the 80-year mark has been passed.

5) A ground rent is a payment made by the leaseholder to the freeholder for the term of the lease. The lease will usually provide that this ground rent increases over time. A statutory lease extension gives you the right to extend your lease and reduces your ground rent to a peppercorn going forward. In this way a lease extension can resolve the issue of high ground rent.

6) By extending your lease, you ensure that the value of one of your main assets is preserved to safeguard the financial security of you and your family for the future.

This specifically relates to flat leases. However a similar system applies to leases of houses which can also be extended.

- David Marsden is a Partner in the Commercial Property team at award-winning, Watford based law firm VWV