Does this sound like a reasonable price to extend a lease?

[thepeopleversuswork]

I've applied to extend my lease from its current 85 years to 125 years. I've been quoted just under sixteen grand by the freeholder.

I know each contract is different and subject to its own vagaries etc but this sounds like a total rip-off to me. I know anecdotally of people who have paid a fraction of this for multi hundred year lease extensions.

Any advice or just a sense check would be much appreciated here.

I have a relative who paid almost £25k for a short extension to her lease. Unfortunately the problem with leases is that the freeholder/management company can charge what they like and mortgage companies won’t lend when there are too few years left, so you don’t have a lot of choice.

did you use the calculator on line ??..leasehold advisory service has the calculator..

doesnt sound too bad to me, its all linked to ground rent also...does new lease abolish the ground rent...get that written it the new lease...i know people who have paid a lot more.

@SunbathingDragon thanks.

I understand in principle that they have you over a barrel. But curious to know if I have any leverage to at least negotiate a longer lease. If I'm going to drop £16k on this I want to make sure I get my money's worth.

We paid c25k to extend from 66 years to 125, this was about 7 years back, central London. Once it’s below around 70 years the price will go up quickly. I’d say your 16k quote sounds fairly reasonable.

You can take it tk a leasehold tribunal but you would pay your surveyors costs and theirs an also their costs of doing so so it is usually cheaper to negotiate. The other thing is the closer it gets to below 80 years the cost of extension increases. Some mortgage companies will not lend if there is less than 80 years left.

About right I would say.
there might be some wiggle room. I would try and get more years for the same price

I know anecdotally of people who have paid a fraction of this for multi hundred year lease extensions.
It's mathematically complicated. Extending 100 years from a 50 years-remaining is not the same as extending 100 years from a 250 years-remaining.
Use the calculator.

Thanks @earsup I've just done the calculator. It does sound about right. Astonished at how expensive this is but its probably got to be done.

Thanks also for the tip about ground rent.

Unfortunately the problem with leases is that the freeholder/management company can charge what they like

That's completely wrong, leasehold extensions are subject to a statutory calculation, they can't charge what they like. OP please use the calculator above, or contact the LAS for further advice.

Why are you only extending for 40 years, btw? The law says you have the right to "a term expiring 90 years after the term date of the existing lease".

Go for longer if they will agree it...or share of freehold...is that possible for you...??...I know friends who got ground rent abolished when they did a new lease and others managed to do share of freehold but only 2 flats in a house etc....there are new rules out now so do check again !

And forget to mention...my late grandmother had a leasehold house...originally 999 years...but ground rent was pennies so that affects the calculations etc...lenght of original lease and the amount of ground rent etc....she paid very little to get the lease back to 999 and then sold...although still 850 years remaining !

I think that seems about right. We paid £13k 10 years ago to extend ours in our old flat, I think we were about at about 80 years.
We live in SE London if that makes a difference.

How big is the block?
If it’s just a few flats rather than a big development, it might be worth sounding out your neighbours to see if anyone else would be interested in buying the freehold

If you can get enough interest to force the freeholder to sell, it might work out about the same price to buy as to extend the lease

It’s less practical if you’re in a bigger block though

I read that the more you ask for quotes the more they put it up.

That happened to my friend. Annual quotes. Didn’t take any of them. Price went up drastically. But perhaps that’s as each year it was nearer the threshold for mortgages. She’s planning to sell so needs it upped.

The length of lease upped I mean to make it more attractive to potential buyers.

@senua

Why are you only extending for 40 years, btw? The law says you have the right to "a term expiring 90 years after the term date of the existing lease".

@senua

They specified the 40 years, not me - we're just at the start of negotiations. Where did you see this thing thing about 90 years after the term date of the existing lease?

16k with a lease over 80 years is daylight robbery
5k tops unless you have a crazy ground rent
90 years is your statutory right, also ground rent will then be 0 for the rest of the lease
They are trying it on with you, 16k is a terrible price unless you have a doubling ground rent or one that rises with inflation

Where did you see this thing thing about 90 years after the term date of the existing lease?
Here and here.

I paid £7k last year to extend my lease.
I am in the North West though and a conveyancer friend did it for me.

I paid just legal and management agency fees which were £1500 to £2000 to extend from 90 years to 900+..but flat was share of freehold.

Negotiate for another 90 years

Senua is right. You have a right to add 90 years to what is left of the original term. It is worth reading up on the process. You can do it yourself but it may be cost effective to consult a solicitor.

Sounds a lot. I paid similar to extend my sub-70 year lease by 90 years (so it’s now approx 160 years). East London.

It included the cost of surveyors and solicitors.

It depends on the value of the property and it sounds a lot given that you are not below 80 years yet . It would be ok if the property was worth a lot, well over 1/2 a million but I think that’s high having paid about £10 000 to extend a property that was down to 78 years and worth about £350000. I would query that figure, you can speak to Lease for free. www.lease-advice.org/