Lease Extension - reasonable? worth it?

TEEP

We own a 1 bed maisonette in southampton worth about £105k with 82 years left on the lease. We are saving to buy a house and will have enough money in roughly 2-3 years, at which point the lease will be less than 80 years (just).

Our landlord has given us a price of £7k (plus costs) to extend it up to 99 years. Our ground rent is £135 per year and we also pay about £200 per year contribution to buildings insurance.

Are we being swindled? Is it worth paying to extend it or should we just risk selling with 78/79 years left and hope for he best? Will it have a huge impact on the price of our flat?

Any help will be greatly appreciated.

suze_g

I'm not too sure but I'm buying a property in London that has just had it's lease extended. It now has 112 yrs. It cos the owner £18k to do this because it was only 68 yrs remaining.

The ones I looked at with shorter leases (ie around 76 yrs) were typically around 15k cheaper. I gave up looking at short leases, as around here £15k to 20K is the norm for extending them and I would never be able to afford that.

I would check with the lease advisory service as I think 7k may be too much for an 82 yr lease. it's probably their starting point and they may have to negotiate downwards. I did a calculation on their website that showed it would probably cost around 3k to extend a lease with 82 yrs left.

GDB2222

I THINK THE LEASE EXTENSION SHOULD BE AROUND £2K (oops caps!), based on a discount rate of 5%. You have a statutory right to extend, and the Lands Tribunal will fix a fair price if you can't agree. I suggest getting some professional advice, or just counter-offer £2k and see what the LL says.

Richard_Webster

£7K is far too high. Once you have owned the maisonette for 2 years you are entitled to a 90 year extension - to make it 82+90 = 172 years with a nil ground rent. I would guess the cost of that at something of the order of £2-4K. At 79 years the marriage value element should not make much (if any) difference to the calculation.

Also in the Southampton area at the moment not that many people are savvy about the significance of 80 years in lease length and people seem to be able to get away with selling flats in the 75-80 year bracket without too much trouble, so you might not need to extend. It might be best not to get too involved with the freeholder on the point.

If you PM the address of the flat and the name of the landlord and managing agent I may know more from local knowledge.

socrates

Richard_Webster wrote: »

£7K is far too high. Once you have owned the maisonette for 2 years you are entitled to a 90 year extension - to make it 82+90 = 172 years with a nil ground rent. I would guess the cost of that at something of the order of £2-4K. At 79 years the marriage value element should not make much (if any) difference to the calculation.

Also in the Southampton area at the moment not that many people are savvy about the significance of 80 years in lease length and people seem to be able to get away with selling flats in the 75-80 year bracket without too much trouble, so you might not need to extend. It might be best not to get too involved with the freeholder on the point.

If you PM the address of the flat and the name of the landlord and managing agent I may know more from local knowledge.

This post is class.

How good is it to find an expert locally who can deal in facts not opinion!

TEEP

Thank you every one for your advice, it is greatly appreciated.

Richard - I've been trying to pm you but the website won't let me log in. I'll get it sorted and try again soon, but thanks for you offer anyway.

Richard_Webster

Richard - I've been trying to pm you but the website won't let me log in. I'll get it sorted and try again soon, but thanks for you offer anyway.

Or do a bit of inspired Googling to find MY website and use the Contact Us page! I can't give you the details here but you know roughly where I am and what i do!

GDB2222

Richard_Webster wrote: »

Or do a bit of inspired Googling to find MY website and use the Contact Us page! I can't give you the details here but you know roughly where I am and what i do!

I can!
http://www.rwco.co.uk/

Richard, I am assuming you did not provide the link because of site rules. If it was for some other reason, please let me know and I'll delete this post.

Richard_Webster

Richard, I am assuming you did not provide the link because of site rules. If it was for some other reason, please let me know and I'll delete this post.

That's right. I've been told off by other people in the past where some point came up similar to one on MSE on another forum - and I provided a link to my answers on the other forum where they did allow linking back to my website!