Lease Extension
Discussion
My son recently bought a flat with 70+ years remaining on the lease. He looked at various flats on this estate, with leases ranging from about 55 years up to 130 years. The estate agent said extending the lease was not an issue, but would cost a good few thousand pounds, but could not be done until he'd lived there for 2 years. He's quite keen to extend it by about 50 years when he can. Get it up to 125 or there abouts.
Anyway, watching Homes Under The Hammer recently, and someone bought a flat with a shortish lease (about 50 years), and their first job was to pay to extend the lease?? So what about the 2 years? Anyone know the rules?
Anyway, watching Homes Under The Hammer recently, and someone bought a flat with a shortish lease (about 50 years), and their first job was to pay to extend the lease?? So what about the 2 years? Anyone know the rules?
I have a flat on which I would also like to do the same - I think I read on here that unless you have very few years remaining, the best thing to do at the moment is to sit tight and await some new Goverment Leasehold Reform rules / laws, which should hopefully make it easier for everyone to do this......
Have a read here:
Leasehold Advice
I think September springs to mind as a key date....but it is quite possible that I am making that up completely.....
Have a read here:
Leasehold Advice
I think September springs to mind as a key date....but it is quite possible that I am making that up completely.....
2 years is length of ownership before you can apply for a statutory lease extension. Lease extensions get increasingly more expensive from 80 years remaining and lower, as an additional term "the marriage value" comes into play.
This is probably the best source of information: https://www.lease-advice.org/faq/how-can-i-extend-...
including link to: https://www.lease-advice.org/advice-guide/lease-ex...
This is probably the best source of information: https://www.lease-advice.org/faq/how-can-i-extend-...
including link to: https://www.lease-advice.org/advice-guide/lease-ex...
If you are looking at purchasing then the vendor should start the process and hand over the rights to you. If not then you will need to live there for 2 or 3 years before you can force the extension.
Due to it being a short lease this will cost a lot. One of the flats in my block has circa 70yrs left on their lease. Market value 250k, lease extension cost circa 50k. So a good few thousands as the estate agent says. As the lease gets shorter so the cost increases due to the introduction of marriage value. This is where you pay a percentage of the increase in value of the property as a result of a longer lease.
With regards to Leasehold Reform, I am highly doubtful that this will be retroactive, otherwise the Crown Estate and the Duke of Westminster's freehold value would be reduced to nothing...these are two people who can certainly afford to challenge any detrimental change in court.
Due to it being a short lease this will cost a lot. One of the flats in my block has circa 70yrs left on their lease. Market value 250k, lease extension cost circa 50k. So a good few thousands as the estate agent says. As the lease gets shorter so the cost increases due to the introduction of marriage value. This is where you pay a percentage of the increase in value of the property as a result of a longer lease.
With regards to Leasehold Reform, I am highly doubtful that this will be retroactive, otherwise the Crown Estate and the Duke of Westminster's freehold value would be reduced to nothing...these are two people who can certainly afford to challenge any detrimental change in court.
Edited by Bob_The_Builder on Tuesday 24th May 17:05
Bob_The_Builder said:
If you are looking at purchasing then the vendor should start the process and hand over the rights to you. If not then you will need to live there for 2 or 3 years before you can force the extension.
Due to it being a short lease this will cost a lot. One of the flats in my block has circa 70yrs left on their lease. Market value 250k, lease extension cost circa 50k. So a good few thousands as the estate agent says. As the lease gets shorter so the cost increases due to the introduction of marriage value. This is where you pay a percentage of the increase in value of the property as a result of a longer lease.
With regards to Leasehold Reform, I am highly doubtful that this will be retroactive, otherwise the Crown Estate and the Duke of Westminster's freehold value would be reduced to nothing...these are two people who can certainly afford to challenge any detrimental change in court.
Sorry but someone is taking you for an absolute ride. No chance a lease of 70y with a value of £250k costs £50k to extend. Due to it being a short lease this will cost a lot. One of the flats in my block has circa 70yrs left on their lease. Market value 250k, lease extension cost circa 50k. So a good few thousands as the estate agent says. As the lease gets shorter so the cost increases due to the introduction of marriage value. This is where you pay a percentage of the increase in value of the property as a result of a longer lease.
With regards to Leasehold Reform, I am highly doubtful that this will be retroactive, otherwise the Crown Estate and the Duke of Westminster's freehold value would be reduced to nothing...these are two people who can certainly afford to challenge any detrimental change in court.
Edited by Bob_The_Builder on Tuesday 24th May 17:05
Cotty said:
Alpinestars said:
Sorry but someone is taking you for an absolute ride. No chance a lease of 70y with a value of 250k costs 50k to extend.
Agreed. Mine was valued at 320,000 with 65 years left. Cost 30,000 to add 100 years to the lease.falt value £190k lease extension £18k
Previous owner started the lease extension process when I bought my flat.
Value Circa £350k, lease remaining 80 years, extended another 99, cost £6k.
This was earlier this year. The freeholder is the council not a private company though and ground rent is very low so this may make a difference.
Value Circa £350k, lease remaining 80 years, extended another 99, cost £6k.
This was earlier this year. The freeholder is the council not a private company though and ground rent is very low so this may make a difference.
Noblebenn said:
Previous owner started the lease extension process when I bought my flat.
Value Circa 350k, lease remaining 80 years, extended another 99, cost 6k.
This was earlier this year. The freeholder is the council not a private company though and ground rent is very low so this may make a difference.
At 80 years, you’re paying for the present value of ground rents and the reversionary interest. There’s no marriage value. Even £6k is very toppy. Value Circa 350k, lease remaining 80 years, extended another 99, cost 6k.
This was earlier this year. The freeholder is the council not a private company though and ground rent is very low so this may make a difference.
Plug some numbers into this calculator: https://www.lease-advice.org/calculator/
trevalvole said:
Plug some numbers into this calculator: https://www.lease-advice.org/calculator/
The problem with that calculator is that you need to know the value of the long lease. Which means you need to know the relativity. Which is one of the biggest points of contention. It’s easier to use a short lease calculator like this;https://www.bradysolicitors.com/lease-extension-ca...
TwigtheWonderkid said:
Bob_The_Builder said:
If not then you will need to live there for 2 or 3 years before you can force the extension.
What if you don't have to force it. What if the freeholder is happy to extend the lease upon request (obviously for the right money) TwigtheWonderkid said:
TwigtheWonderkid said:
Bob_The_Builder said:
If not then you will need to live there for 2 or 3 years before you can force the extension.
What if you don't have to force it. What if the freeholder is happy to extend the lease upon request (obviously for the right money) I’d have thought most freeholders would be happy enough to extend at any point - it’s money for old rope from one perspective. Whether they’ll give a reasonable price for the extension if they’re not being forced to agree to it is a different question, so use the on line calculators and go in with your eyes open.
In my experience the freeholder will allow extension at any time, for the right price.
Unfortunately unless you’re looking to do a statutory lease extension (after owning for 2 years or if you buy a place and the seller passes you the right to a statutory extension once the process has begun), it’s likely you’ll be paying far in excess of what the online calculators state.
Some freeholders can be very difficult to work with and and I believe you’re only allowed one attempt at a statutory extension every two or three years IIRC, so if you go down this route it’s imperative you have a decent solicitor who won’t make any errors in the process.
Statutory extension may even end up not being the cheapest option as you’re liable for the freeholders legal fees and there’s often an attempt to recoup any ‘lost’ profit from extension by adding exorbitant legal costs from their (usually) in house legal team or legal company under their same umbrella of companies.
The above isn’t for every case but it does appear to be a common theme. In short, most of the freeholders want to maximise their investment so be prepared to pay.
If the property charges ground rent ensure this is reduced to nothing, be especially careful to have doubling ground rent clauses removed as once you’re over 500/year for ground rent (or over 1k in London) the property will effectively be on an assured short hold tenancy.
HTH, I’m no lawyer so do you own research, and good luck.
Unfortunately unless you’re looking to do a statutory lease extension (after owning for 2 years or if you buy a place and the seller passes you the right to a statutory extension once the process has begun), it’s likely you’ll be paying far in excess of what the online calculators state.
Some freeholders can be very difficult to work with and and I believe you’re only allowed one attempt at a statutory extension every two or three years IIRC, so if you go down this route it’s imperative you have a decent solicitor who won’t make any errors in the process.
Statutory extension may even end up not being the cheapest option as you’re liable for the freeholders legal fees and there’s often an attempt to recoup any ‘lost’ profit from extension by adding exorbitant legal costs from their (usually) in house legal team or legal company under their same umbrella of companies.
The above isn’t for every case but it does appear to be a common theme. In short, most of the freeholders want to maximise their investment so be prepared to pay.
If the property charges ground rent ensure this is reduced to nothing, be especially careful to have doubling ground rent clauses removed as once you’re over 500/year for ground rent (or over 1k in London) the property will effectively be on an assured short hold tenancy.
HTH, I’m no lawyer so do you own research, and good luck.
Edited by carbonblack on Friday 27th May 09:11
Edited by carbonblack on Friday 27th May 09:11
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