Leasehold reform

lukekelly19

I am thinking of buying a flat. It has 92 years left on the lease, so I could either:

- wait two years after purchase to extend the lease

- ask the sellers to start the process now

- or wait until leasehold reforms take effect...

The differences brought by the reforms, as far as I understand (v limited!), could be making it cheaper to extend with <80 years. and allowing extension to 990 years.

-If it becomes cheaper to extend <80 years, is there any advantage to extending with, say, 90 years instead of 80? i.e. will the cost simply become proportionate to the time left?

-what will the costs/benefits of extending to 990 years be? will it be worth waiting for? ie if I extend pre-reforms, and spend £10k to do so, would that be wasted money if it turns out I could've extended for 990 years for 10k in 2027?

Does anyone have any thoughts/suggestsions? I understand there are still several key unknowns.

BarelySentientAI

Could be cheaper, could be more expensive.  Several of the changes have unclear implications and some are likely to be challenged.  We still don't actually know when (or if) the entire package will take effect.

If you spend money on anything now, and then in a few years time you could have spent the same money on something different or better, is the money wasted?

NameUnavailable

If you decide to buy the flat personally I would buy and then wait for the new Govt. to implement the reforms before extending, as it may be less costly and you get a much longer lease (which will be a factor when you come to sell). As you know, you will have to wait 2 years in any case, unless that changes as part of the reforms.

eddddy

lukekelly19 said:

-what will the costs/benefits of extending to 990 years be? will it be worth waiting for? ie if I extend pre-reforms, and spend £10k to do so, would that be wasted money if it turns out I could've extended for 990 years for 10k in 2027?

All other things being equal, it would work like this:

Option 1)

• Extending the lease by 90 years to 180 years might cost £10k. 
• Then extending the lease from 180 years to 990 years might cost £200

Option 2)

• Extending the lease from 90 years to 990 years might cost £10,200

(But, for example, you'd have to pay legal fees twice for option 1.)


BUT.. the big unknown is whether the deferment rate will be changed - that's a kind of Interest Rate. There's talk of reducing it. That could hugely increase the cost of a lease extension.