Lease extension

Robzey

Hi 

just a query 

I’m in the process of buying a flat 

property bought for - 202000
years on left on lease 97
ground rent 200 increases every 10 years with RPI - new review 2032

im planning on getting in there and I’m due some money in the next couple of years which will bring the lease down to 94 ish

im planning to extend the lease at 94 years to Bin the ground rent and add another 90 via a statutory extension - reason being I have no idea how long I’ll be there and I want to make it attractive to buyers in the future for when I do want to sell

has anyone got a rough estimate on how much it would be ? 

Many thanks 

Robzey

And it’s outside of London 

eddddy

Under the current legislation, a Statutory Lease Extension might cost £13k to £16k - plus £4k or £5k in fees.

But there's lot of talk about reforms, which might (or might not) happen within the next 2 or 3 years.

The reforms might reduce the fees, but some people are worried that the cost of some lease extensions might increase.

Robzey

So 13-16 k based on what information I gave you ?

Robzey

Based on the information I gave you. You think that’s how much it would cost roughly?

eddddy

Robzey said:

Based on the information I gave you. You think that’s how much it would cost roughly?

Yes.......

Did you expect it to be more or less than that?

Robzey

More. I must of worked it out wrong

how did you come to these figures ? How did you do the rough calculations? If you don’t mind me asking 

Robzey

And also do you think it’s worth doing at 94years? I’m sorry to bombared you with questions . 

eddddy

Just as a starting point...

• Assume you had a 94 year lease with a ground rent of £200 that increased every year with RPI

• So buying out the ground rent would cost 94 x £200 = £18,800

• But your ground rent doesn't increase every year - it increases every 10th year - so that might reduce the cost of buying out the ground rent to around £10k

• Plus according to the online calculators, the loss in reversion value to the freeholder is around £5k

But there can be big arguments at Tribunals about valuing ground rents that increase with RPI. And looking at past Tribunal decisions, you might even find that £10k is a bit high.

Robzey

eddddy said:

Just as a starting point...

• Assume you had a 94 year lease with a ground rent of £200 that increased every year with RPI

• So buying out the ground rent would cost 94 x £200 = £18,800

• But your ground rent doesn't increase every year - it increases every 10th year - so that might reduce the cost of buying out the ground rent to around £10k

• Plus according to the online calculators, the loss in reversion value to the freeholder is around £5k

But there can be big arguments at Tribunals about valuing ground rents that increase with RPI. And looking at past Tribunal decisions, you might even find that £10k is a bit high.

I think I under stand lol I’m not the brightest 

Isit to do with what it’s worth now vs yo what it’s worth in the future?

so you’ve done 10k ish to buy out ground rent then 5k ish for reversion 

thats how you got to 13-16k right?

Robzey

And if the deferment rate drops which is at current 5% it will be even more expensive right?