Cost of lease extension with doubling ground rent

Katiejackson81

I'm hoping someone can help me estimate the cost of extending my lese when I open up negotiations with the freeholder. There are 88 years left, annual ground rent is currently £250 a year, and rent doubles in 2035, and then keeps doubling every 20 years until the end of the lease. I've calculated this would be:

£500 from 2035
£1,000 from 2055
£2,000 from 2075
£4,000 from 2095
Ends 2113

The lease calculator doesn't account for doubling rent. If I input £250 a year it estimates up to £8k to extend, and if I input the average of the above £1,642 a year) it comes out at up to £26k. That is a huge difference, and I'm sure either is accurate! Can anyone help? The freeholder quoted me £15,600 last year and I'm not sure how reasonable that is.

Thanks!

eddddy

You haven't mentioned the market value of your flat - which impacts the price of a lease extension.

But using the Statutory formula (as it exists today), your escalating ground rent should add about £3.5k to £5k to the cost of the lease extension.

So assuming you used a reliable calculator with the correct figures (and a fixed ground rent of £250) and got an answer of £8k...


... the escalating ground rent would increase that to between £11.5k and £13k for a Statutory Lease extension.

Katiejackson81

Thanks for this, the value is c. £280k if that makes a difference?

eddddy

Katiejackson81 said:

Thanks for this, the value is c. £280k if that makes a difference?

Yep - that confirms that a Statutory lease extension might cost between £10k and £13k


A statutory lease extension adds 90 years to your lease, and reduces your ground rent to zero (peppercorn) immediately.

Are those terms what your freeholder is offering for £15.6k? (And no other changes to your lease?) That would be called an Informal Lease Extension.


Informal lease extensions might have lower valuation/legal fees than statutory lease extensions. So if you can negotiate the freeholder down by £3k or £4k - it might be a reasonable deal.


But maybe you want to get a professional valuer to double-check the figures, and maybe use a specialist solicitor who will look out for 'nasty tricks' by the freeholder.