Leasehold Flats

NameUnavailable

If you buy a leasehold, you are buying a bundle of A4 paper that proves you have a legal right to occupy the property for X number of years, subject to paying things like ground rent and maintenance.

As the value of property increases (or decreases) so will the value of the lease.

When you want to move again you are essentially selling your lease onto another person, just in the same way as someone selling a house, or a car, or pretty much anything. They buy the lease from you and they then own it.

The lease will eventually run out if nobody extends it, and at that point it would revert to the freeholder. Your 'rental' period is up. In practice however most people will pay to extend their lease long before that becomes an issue (and ideally before it falls below 80 years as the cost to extend gets much higher after that point).

pieroabcd

Who decides by how long to extend the lease? Are there fixed terms that the holders have to respect or can they decide freely?
Say for example that you buy a 100 years leasehold but you want to extend it to 999. What's the typical ratio of renewal/"purchase" price cost of wanting to extend it so much?

eddddy

pieroabcd said:

Who decides by how long to extend the lease? Are there fixed terms that the holders have to respect or can they decide freely?
Say for example that you buy a 100 years leasehold but you want to extend it to 999. What's the typical ratio of renewal/"purchase" price cost of wanting to extend it so much?

Currently, the law allows a leaseholder to force a lease extension of an extra 90 years with the ground rent reducing to zero.

It's called a statutory lease extension, and there is a formula for calculating the cost.



A leaseholder doesn't currently have a legal right to extend their lease from 100 years to 999 years.

But it can be done if the leaseholder can negotiate a price with the freeholder. There are no rules about how the price is calculated, so it could be any amount - it's whatever both parties agree on.  

If both parties can't agree on a price - for example, the leaseholder won't offer more than £500 but the freeholder won't accept less than £50,000 - then the lease extension won't happen.

Or the freeholder might flatly refuse to offer a lease extension to 999 years at any price, so again, it won't happen.