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pen_name

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Tom99

[FONT=Verdana, sans-serif]It will cost about 12.5% more to extend a 85yr lease than a 90ys lease, plus any increase in property values over the 5 yrs.[/FONT]
[FONT=Verdana, sans-serif]Its possible that the proposed reforms will make the overall cost cheaper so worth waiting for, but you should be aware that one of the proposals is to remove the 80 yr cap for including marriage value, so all lease extensions would pay 50% of marriage value.[/FONT]
[FONT=Verdana, sans-serif]That could mean leases of 80-90yrs may be more expensive to extend after the reforms than now.[/FONT]
[FONT=Verdana, sans-serif]One of my contributions to this consultation was that marriage value should be ignored entirely because it has only arisen as a result of the fall in value of the leaseholders interest, whereas the freeholders interest has not fallen in value at all.[/FONT]

Tom99

pen_name wrote: »

Thanks for the detailed answer, but I'm now confused. I though these proposals were meant to help leaseholders, not make them pay more? So perhaps it's better to just extend the lease now or in 2019, rather than take a risk?

My current flat value is £380K and ground rent is £10 with 90 years left on lease, if the new proposal to remove the 80 yr cap goes through, how would that work with marriage value? How is that calculated? This calculator freeholdcalculator.com/leasehold_extension.php doesn't tell me.

[FONT=Verdana, sans-serif]The proposal to remove the 80yr cap on sharing marriage value is only one of many suggested changes upon which comments are invited.[/FONT]

[FONT=Verdana, sans-serif]Most of the other suggestions would result in a simpler and therefore probably cheaper deal for the leaseholder.[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]I think its unlikely the 80yr cap will be removed because, as you say, that might result in a higher premium for 80-90yr leases and the whole object of the proposals are to make it simpler and cheaper for the leaseholder.[/FONT]

[FONT=Verdana, sans-serif]Above 80yrs marriage value would be quite small anyway.[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]At 60yrs marriage value would be about 10% of the new lease value, at 70yrs about 4% and at 80yrs about 1-2%.[/FONT]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]Putting your figure into:[/FONT]

[FONT=Verdana, sans-serif]https://www.freeholdcalculator.com/leasehold_extension.php[/FONT]

[FONT=Verdana, sans-serif]Shows that your current £380,000 lease would become worth £389,700 at a cost of £4,933 giving you a profit before costs of £4,767. That £4,767 is the marriage value which is all going to you and not shared.[/FONT]

[FONT=Verdana, sans-serif]So the marriage value is £4,767/£389,700 = 1.22% of the end value.
[/FONT]
[FONT=Verdana, sans-serif]If marriage value was to be split 50/50 you would pay £4,933 + £4,767/2 = £7,316 giving you a profit before costs of £2,384, most of which would probably be taken up by both parties surveying and legal costs which you would have to pay.[/FONT]

Tom99

pen_name wrote: »

Thanks for the explanation. Sorry, I meant to edit my message and manage to delete it altogether!

I'm now thinking it's best to wait until the consultation is over and see where things are going with the new law, maybe if going in the wrong direction (for me) - I still have time to extend until the new law comes into effect, assuming that law won't come into effect before 2020? How long do these things take?

[FONT=Verdana, sans-serif]Who knows, it is only at consultation stage at the moment, it might never happen.[/FONT]
[FONT=Verdana, sans-serif]I would guess you will have enough time, once the proposals have been firmed up, to serve a section 42 if it looks advantageous rather then waiting.[/FONT]
[FONT=Verdana, sans-serif]I think its mostly in the reduction of both sides cost that you pay where you may see a saving in your case, as the ground rent is only £10.[/FONT]