Leasehold extension on a Maisonette, advice required please!

OhSnap241

Hi Everyone

Im currently looking into extending the lease on my 1 bedroom Maisonette and could really do with some advice!

I own and have lived in my one bedroom maisonette (one of 4) in Greater Manchester for almost 9 years and it has recently come to my attention that the lease has 68.3 years remaining, the impact of having a short lease was never explained to be when i bought the property. I pay an annual ground rent charge of £30 but no maintenance fee. The property was valued at 60k two years ago but one of ground floor flats was recently put up for sale at 50k.

I have recently contacted the freeholder to ask what the premium for an extension to 90 years would be, however he proposed an “out of act” deal in which the ground rent would be increased to £250pa with a premium of £17000 in exchange for extending the lease to 99 years.

Obviously i feel this is far too much money and so I have recently begun contacting solicitors and valuers and have been told that it will more than likely cost £1200 in solicitors fees and £500 valuers fees on both sides. So a total charge to me of £3500.

I also found a calculator online and used it to try and determine the premium to be paid;

1 CAPITILISATION OF GROUND RENT INCOME -£402.93
2 DEFERRED VALUE OF THE REVERSION 4745.781
3 MARRIAGE VALUE:
£60000 X (100% - 94.5%) = £3300
Less capitalisation of ground rent = £410.32
Less deferred value of reversion = £2142.506
Total £747.174
Landlord entitled to 50% = £373.587

Capitalisation of the ground rent.......£410.32
Deferred value of the reversion.......£2142.506
Share of marriage value................£373.587
Total........................................£2926.413

BASED ON PROPERTY VALUE AT £60,000, GROUND RENT AT £30p.a ON A LEASE OF 68.3 YEARS REMAINING
DEFERRED VALUE OF REVERSION DISCOUNTED BACK AT 5.5%CAPITILISATION OF GROUND RENT INCOME at 7.25%

And so my questions are;

1. Does the solicitors/valuers fees seem accurate?
2. Is the premium i have calculate a good indication of what i will pay?
3. As my solicitor made no indication of the financial implications of buying a property with a short lease, do i have any come back after almost 9 years?

Any help or advice anyone could offer me would be greatly appreciated. This is causing me more than a few sleepless nights!

OhSnap241

Just spotted my own mistake on this one. The reversion should be 2142

richardw

Could you get together with the other three maisonettes leaseholders to share fee costs?

OhSnap241

Hi Richard

It's an option we are looking into but I'm not sure everyone can afford it at this time.

propertyman

Your premium is going to be nearer the £4/4.5K and fees will be nearer £2000.

Your capitalisation on gr and relativity are a little low, but its a far cry from £17K !

OhSnap241

propertyman wrote: »

Your premium is going to be nearer the £4/4.5K and fees will be nearer £2000.

Your capitalisation on gr and relativity are a little low, but its a far cry from £17K !

Thanks propertyman, I was expecting the premium to be a little higher. Do you feel the premium would rise substantially if I waited 3years?