Extending a lease for a shorter period

Kevxter

Can anyone help with this? I need to extend my lease and I'm thinking of going down the informal route because I don't require a 90-year plus extension. Due to my personal circumstances, I would rather just extend the lease for 60 years. Does anyone know if the premium for a shorter lease is likely to be a lot cheaper - for example, if a 90-year lease extention would cost me £9k, could I reasonably expect to get a 60-year one for £6k?

I haven't been able to find an answer to this anywhere, as all the online calculators assume you want to 90-year extension.

eddddy

The premium for a 60 year lease extension will be whatever you and the freeholder agree on. There are no rules on how much it will cost.

So the freeholder might ask for £6k, £9k, £12k, £24k or some other amount. And you can offer whatever you like. If you can agree a cost, then you can go ahead with the extension.

But there is also something called a "Statutory Lease Extension". It adds 90 years to your lease, and reduces the ground rent to zero. With a "Statutory Lease Extension", the cost is calculated using a standard formula, and (usually) the freeholder cannot refuse.

blue_max_3

The biggest factor is the current length. The shorter the lease, the more it will cost you. Once you get down to the 60-80 year territory, it can be hard to get a mortgage on, limiting your chances of selling at a good price.

Kevxter

eddddy said:

The premium for a 60 year lease extension will be whatever you and the freeholder agree on. There are no rules on how much it will cost.

So the freeholder might ask for £6k, £9k, £12k, £24k or some other amount. And you can offer whatever you like. If you can agree a cost, then you can go ahead with the extension.

But there is also something called a "Statutory Lease Extension". It adds 90 years to your lease, and reduces the ground rent to zero. With a "Statutory Lease Extension", the cost is calculated using a standard formula, and (usually) the freeholder cannot refuse.

Thanks. Yes, the reason I am considering the 'informal' route is that I thought opting for 60 years (rather than the 90 years going down the formal route) would get me a cheaper offer from the freeholder. I guess a surveyor would know if I got one to estimate the Premiums.

eddddy

Kevxter said:

Thanks. Yes, the reason I am considering the 'informal' route is that I thought opting for 60 years (rather than the 90 years going down the formal route) would get me a cheaper offer from the freeholder. I guess a surveyor would know if I got one to estimate the Premiums. 

 As I say, it's entirely up to the freeholder what price they will accept for the lease extension.

A surveyor/valuer might tell you that £6k is a 'fair price' for a 60 year lease extension - but that doesn't stop the freeholder from saying they won't accept less than £12k (or whatever number they choose) for a 60 year lease extension.

Also, be careful about other terms the freeholder proposes for a lease extension - especially increased ground rent. Some freeholders offer cheap lease extensions in exchange for higher ground rents. (There have been examples of people ending up with unmortgageable flats, because they got cheap lease extensions with new onerous ground rents.)

You can start a discussion with the freeholder. Maybe either make them an offer for a 60 year lease extension, or ask them to make you an offer for a 60 year extension.

And depending on their reply, take things from there.