To extend the lease... or not?

The_Walker

I'd welcome any input on whether it's a worthwhile idea to extend a lease before selling a property?

Last year I bought a flat mortgage free, but with a 71 year leasehold. The cost of extending has been estimated at £10K and the flat cost £130K. Obviously a "short" lease can impact mortgage availability. But it didn't deter me from buying and no doubt other cash buyers do exist!

I plan to live here for 5 years at least, and then probably sell to move further out away from London. I'm wondering the pros and cons of paying to extend the lease back to a healthy length. I assumed it was a necessary evil, but I'm now unsure. I could simply sell with the short lease anyway.

Or, would extending the lease yield a higher sale value (more than the £10K outgoing) and therefore be profitable?

Bossypants

I can't tell you if the value of your flat with an extended lease will be more than £10,000 than what you paid, but bear in mind that the lease/value you have right now isn't static. This isn't a question of 'to add a conservatory or not to add a conservatory', this is a diminishing asset you have here, and for every year you let it go down further, the value of it to prospective purchasers goes down while the cost of extending goes up. Also you'll always be looking for a cash buyer willing to take it on, which will significantly limit your pool of prospective purchasers. If you find yourself in need of a quick sale, that could be an issue.

I would extend immediately.

janthemum

Definitely extend,
In my limited experience it has paid already.


Bought Feb 2014 110k 71 yr lease.


I extended straight away for 7k (Freeholder didn't require me to wait 2 years.)


Flats 14 months later in same block are on at 115k without extended lease,


135-140k for those flats who have extended.


So money well spent.

Lilly11a

Hi, yes extend the lease as soon as you can.


I extended mine from 75 years to 165 years last year for 10k premium plus circa 3k total fees. My flat is ( fingers crossed ) in the middle of being sold for £193k verses £170-£178k for other flats without the extension ( and my flat is not as nice d!cor wise as some of the higher priced ones)


So that is between 15k-23k more for a 13k outlay .

audigex

I'd say to do your research if possible: see what others are selling for, and what the length of their lease is.