Realistically, when would I need to renew a lease on a leasehold flat?

pptdgc

I'm considering buying a leasehold flat that has 107 (soon to be 106) years left on the lease. The number of years left concerns me slightly when I see other flats with 999 or 200+ years on the lease.

From what I've read, the flat wouldn't lose value until it has 90 years left, but when I come to sell it, would someone buy it if it had 95 / 90 years left? Let's say I sold in 10 years, it would have 96 years left on it.. would I realistically need to renew the lease before then, if I wanted to sell?

Also, I'm wondering about the cost - how accurate is the Lease Extension Calculator here: https://www.lease-advice.org/calculator/

It calculates my lease extension at £5000 - £7000, which seems ok but I know there would be added legal costs. 

Thanks

eddddy

If you sold it in 10 years time with 96 years left on the lease....

• Some people on a tight budget might prefer to buy it without a lease extension - because it would be £5k to £7k cheaper (or whatever). Then they could spend a few years saving up the £5k to £7k for a lease extension.

• Other people might prefer to pay £5k to £7k more for a flat with an extended lease - because they don't want the hassle of extending it themselves.

(FWIW, the government are talking about leasehold reforms that would reduce the fees for a lease extension. So it might be sensible to wait a while.)

NameUnavailable

I think you would be fine if you were selling when there were still over 90 years left. Less than 90 and it's getting that much closer to the 80 year point where it becomes much more expensive to extend and some lenders won't lend.

The other thing to consider is the ground rent and service charge. What is the ground rent now and does it ever increase (and if so when and by how much?).

PadreM

Any lease below 83ish years in length should ring ALARM BELLS.

pptdgc

NameUnavailable said:

I think you would be fine if you were selling when there were still over 90 years left. Less than 90 and it's getting that much closer to the 80 year point where it becomes much more expensive to extend and some lenders won't lend.

The other thing to consider is the ground rent and service charge. What is the ground rent now and does it ever increase (and if so when and by how much?).

Thanks for the help.

Ground rent is set at £225 per year and will not increase. I calculated the lease extension cost based on this.

pptdgc

Sounds like 106 years on the lease isn't as bad as I thought then. I'm pretty sure I would sell within 10 years so could probably manage without an extension, or worth waiting to see if the government reduces the costs.

Thanks

pptdgc

Interestingly, I discovered it was renewed in 2007 with a premium of £5500. I wonder how much that would translate to now? I guess the value of the property has increased so it would be more?

eddddy

pptdgc said:

Interestingly, I discovered it was renewed in 2007 with a premium of £5500. I wonder how much that would translate to now? I guess the value of the property has increased so it would be more?

If the lease was extended in 2007, it sounds like at had much less than 90 years added.

Also, judging by the age of the original lease, I suspect that the ground rent was increased significantly to £225 (maybe from something like £50).

So it seems like the leaseholder might have got a very bad deal back in 2007.

pptdgc

eddddy said:

pptdgc said:

Interestingly, I discovered it was renewed in 2007 with a premium of £5500. I wonder how much that would translate to now? I guess the value of the property has increased so it would be more?

If the lease was extended in 2007, it sounds like at had much less than 90 years added.

Also, judging by the age of the original lease, I suspect that the ground rent was increased significantly to £225 (maybe from something like £50).

So it seems like the leaseholder might have got a very bad deal back in 2007.

 The term of the lease was extended in 2007 by 149 years, the title still refers to the original lease for the property dated November 1980. So the 149-year extension was dated back to 1980... I'm trying to find out why this was the case.

I believe the ground rent was £50 at the time of the extension and the property would have been worth significantly less so £5,500 does seem like a large premium to pay then.

eddddy

pptdgc said:

The term of the lease was extended in 2007 by 149 years, the title still refers to the original lease for the property dated November 1980. So the 149-year extension was dated back to 1980... I'm trying to find out why this was the case.

I believe the ground rent was £50 at the time of the extension and the property would have been worth significantly less so £5,500 does seem like a large premium to pay then.

I guess you mean that the lease was extended to 149 years (rather than by 149 years).

And I'd guess the lease was originally 99 years - so it would have been extended by 50 years. (I suspect because 50 years is a nice round number.)


Increasing the ground rent from £50 to £225 would be equivalent to paying the freeholder about £3k or £4k.  So overall it seems the freeholder made around £8k to £10k out of the 50 year lease extension.