Lease extension - confusion about fees

daugapils

Hi

I am trying to estimate how much would it be to renew the lease on a flat I am planning to buy. It has 94 years left of lease and ground rent is £50 a year ( it is a top level maisonette going for £285000)
Looking at various online lease extension calculators, I get a number around £3000, "plus costs".
What are these costs? I imaging conveyancers would take a cut , but how much would it be , I imagine it should not be charged for more than for flat purchase?
And how does stamp duty fits into these costs - I am completely confused about this charge. Do I calculate stamp duty for lease extension based on £285k ? This would add another 5k to the initial 3k+conveyancy costs.
Please help me to get some clarity here!

daugapils

I think stamp duty for lease extension applies only to second property following April changes

booksurr

daugapils wrote: »

I think stamp duty for lease extension applies only to second property following April changes

no, SDLT has always applied to any lease extension - subject of course to the cost being above the SDLT threshold.

You use the cost of the extension, not the cost of the property, so if the extension will cost 3k then you can forget SDLT. The rent is obviously the rent!
https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

when you calculated 3k cost ("The price of your lease extension is likely to be between £3000 and £5000 plus costs.") I assume you used 285k as the value? Since you are supposed to use the value including the extended lease period are you sure that is the right value to use?
http://www.lease-advice.org/calculator/

eddddy

daugapils wrote: »

Looking at various online lease extension calculators, I get a number around £3000, "plus costs".!

If you go for a statutory lease extension, the legal and valuation costs might be around £3k to £5k

If you go for an informal lease extension, the costs could be less (but you could also get badly ripped-off - so paying for professional advice might be a good idea.)



The legal and valuation costs include: Your valuation fee, your legal fees, the freeholder's valuation fee, your freeholder's legal fees - all of which are payable by you.

With 94 years on the lease, there is no urgency to extend it.

eddddy

booksurr wrote: »

I assume you used 285k as the value? Since you are supposed to use the value including the extended lease period are you sure that is the right value to use?

I doubt that there would be a significant difference in value between a flat with a 94 year lease and a 184 year lease.

(In fact, I think very few buyers would be deterred by a 94 year lease, so I'm not sure you'd even increase the value of the flat by the amount spent on the lease extension.)

daugapils

Thank you everyone!

westernpromise

eddddy wrote: »

I doubt that there would be a significant difference in value between a flat with a 94 year lease and a 184 year lease.

Right, but in 11 years' time there will be a difference.

Sacredcat

You have probably read online never to let a lease go below 80 years, because then the cost of extending goes up loads.
So if you plan to live in that place longer than 10 years or so, you would definitely need to consider lease extension costs. Once the lease gets nearer the 80 years people will think twice before buying from you.

I extended a lease that had fallen to 76 years, and the costs were roughly
Premium £8,000
Legal fees for my solicitor 2500
Survey fees for my surveyor £1500
Legal fees for the Landlord £3000
Survey fees for the landlord £1500

The £ 3000 fee you got from that site was just the premium that the landlord gets for granting the extension.

Also, when buying a leasehold property, you can do an informal extension which the landlord may use to put the lease back up to 99 years. This is usually cheaper than the statutory procedure. I could have done that for maybe £10,000. I did the statutory procedure because I didn't know how long I was going to keep the property.

I paid for the statutory process which meant an extra 99 years was added to the lease. Also ground rent was reduced to nil as part of the statutory process.

If you do an informal extension you still need a solicitor and you will not get ground rent reduced to nil. My neighbour did this and paid £7000 for an extension that put the lease back up to 99 years. She didn't have to pay any survey fees or the landlord's costs.



I would never ever buy a leasehold property again, having had the experience of lease extension, from now I will only buy freehold.

Also a new court case has recently changed the way the lease premium is valued and you ma find it is more than a £3000 premium.