How Does Leashold Extension Work?

marcus1981_2

Hello,

I'm a first time buyer interested in buying a leasehold flat. However, i'm worried about the "leasehold" aspect of it and what this means in terms of its long term investement potential? I understand that if the original lease is longer than 21 years, you have a right to extend your lease (if certain conditions are met such as living in the property for 2 years etc). However, what i'm unsure of is how much it costs to do this. I understand the tenant must pay all the legal fees, but can the landlord demand a heafy price for this extension? This is a tripe example but imagine one pays £130,000 for a 60 year lease, lives in it for 10 years and then wants to extend the lease (which i've read is typically a 90 year extension). How much is this likely to cost? Does the market valuation of the propety affect this figure?

Any adivce would be greatly appreciated

CFC

You are not going to be able to determine this on an 'off the cuff' approach. This is an area for a professional valuer, but please don't think that extending a lease is a really cheap option. The freeholder may have to extend your lease, but nobody says that he has to lose out financially by doing that.

One question you might want to ask if thinking of buying a leashold flat, is whether the other leaseholders are thinking of exercising their rights to buy the freehold and set up their own management company. Not infrequently when leases are set to be extended, this happens instead.