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Does anyone know how much it costs to extend leases?

(14 Posts)
LaurieFairyCake Sun 02-Nov-14 12:09:02

I know nothing about it at all.

There's 8 years to go on the lease and the vendor will sell the right to extend in the £300k purchase price.

Any ideas at all confused

Mrsladybirdface Sun 02-Nov-14 13:47:54

8 years?! it will be a lot and as to the vendor selling the right to extend there is no such thing!! the cost is calculated by taking the value of the flat once lease extended less the current value and the dividing in 2. so....

Current value = 100
value once extended = 150

total to extend will be 25 plus costs

The less left on the lease the greater the increase in value once extended.

Mrsladybirdface Sun 02-Nov-14 13:50:21

at a selling price of 300k I assume this is a London property so would guess the value with extended lease would be 500k + if not more

wigglylines Sun 02-Nov-14 13:53:24

Are you buying cash? It can be hard to get a mortgage under 80 years yo go, very hard indeed at under 70 years. I would imagine almost impossible at 8 years.

wigglylines Sun 02-Nov-14 13:57:11

We extended the lease on my flat. I can't remember the exact figures but we were putting it up from 78 years. It was a 1 bed flat in London over 5 years ago. It cost me £12k.

Spickle Sun 02-Nov-14 14:26:27

The onus is usually on the seller to extend the lease not the buyer and if only 8 years is remaining this will be expensive. Are you getting a mortgage?

Panicmode1 Sun 02-Nov-14 15:03:12

You need to get specialist valuation advice - if you are buying with a mortgage, your mortgage company won't grant a lease on a flat with only 8 years to go....the vendor is talking nonsense about selling you the 'right to extend'. You need to get a proper valuation done so that the calculation can be done along the lines of Mrsladybirdface's example above.

wigglylines Sun 02-Nov-14 15:14:39

Oh bum. My memory is rubbish!

Sorry, in my example, we were buying out the freehold. I remember now, we originally looked at extending the leaseholds and it was pricey, and we'd have to keep doing it, so we ended up going for the option of buying out the freehold (I was in a converted flat and I did this with the other two flats).

The price I quoted above was buying out the freehold. Extending the lease was then a technicality as we owned the freehold between us.

I agree with spickle it's a bit odd as the existing owner usually extends before sale. However if by any chance you are buying with cash, and you have a good idea of how much it costs to extend the lease, you could get a bargain, as they will probably find this property hard to sell without a decent lease.

If you need a mortgage, it's almost certainly not a place you could legitimately put an offer on (although check with your provider of course).

LaurieFairyCake Sun 02-Nov-14 16:49:17

Thanks very much, I literally know nothing about this. I'm just having an initial look at one beds and a lot of them have very short leases 8-26 years

Yes, we would still need a mortgage

PragmaticWench Sun 02-Nov-14 16:52:35

There are online calculators for lease extension costs, you can google them to get an idea. If there is 80 years or more left on a lease you can extend it for nothing (I think). Anything less than 80 years and the cost increases as the length of the current lease decreases.

If the freeholder and leaseholder can't agree a price, you can employ a third party to come up with a figure. There's a technical term for the report they produce but I can't remember what it is.

LaurieFairyCake Sun 02-Nov-14 16:53:48

It says exactly "the vendor would be happy to assign their right to extend to the new buyer"

PragmaticWench Sun 02-Nov-14 16:54:10

It's doubtful you'd get a mortgage on anything less than about 70 years, depending on your mortgage provider and deposit size.

britishbakeoffblues Sun 02-Nov-14 16:55:42

My parents have done this. It cost them £15k to extend to 151 years.
You won't get a mortgage on anything with less than about 60 years on the lease.

TsukuruTazaki Sun 02-Nov-14 16:58:06

Yes it is perfectly possible for a vendor to assign their right to extend to you.

Otherwise you wouldn't get the right to extend until you've been there two years

However I would never buy a flat with such a short lease. Wouldn't touch with a barge pole unless rock bottom price.

300 k sounds exorbitant for a property with only an 8 year lease - does this include the agreed fee for the lease extension?

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