Buying a flat with a short lease and extending it

[JandLandG]

Hello again - I posted in this section about the possibility of buying a flat in London over the next 18 months or so and just wanted to get some thoughts/advice on a particular topic if anyone is able to contribute.

My overall budget might be around 425k, but just looking at options

Maybe I buy a flat for cash with a low leasehold period left - they're much cheaper, obviously.

So, could anyone advise me on the intricacies of buying a flat with a short number of years leasehold on it (say, below 50) and getting that leasehold extended back up above 125 yrs, say?

Is this just a matter of going through a legal process and paying?

Or is it at the behest of the leasehold owner who could refuse if they wanted?

A risk, obviously.

I'd still have a place to live, but a decreasing value as the leasehold duration fell.

Is this even a thing? I believe some legal changes are pending (see below).

Someone must be buying flats like this; there are a few of them when I search - nice places in nice locations but much cheaper than other options solely bc they have a low number of years left on the leasehold.

Just an example -
One bed in Bloomsbury

So...any experience/knowledge welcomed if anyone has a sec. Is there anything else I need to be aware of? 🙏

*Advice provided with flat above -

Under the current lease-extension valuation framework, an indicative premium of approximately £40,000 has been suggested; purchasers should obtain their own specialist valuation and legal advice.

Importantly, the Leasehold and Freehold Reform Act 2024 provides for significant future changes to the statutory lease-extension system. Once the relevant provisions are brought into force, the reforms are intended to introduce 990-year extensions at a peppercorn ground rent, remove marriage value from the calculation and change the valuation methodology. These changes could materially reduce extension costs for some short-lease properties, although the final cost for this apartment cannot currently be predicted and the key valuation provisions are not yet in force.

The leasehold reforms promised by the Labour government that will remove ‘marriage’ value are delayed and there is no approximate date when they might materialise. That estimate of £40k to extend is probably without the marriage value. As it stands, it would be more like £90k (or more if there is ground rent) to extend (plus solicitor’s and surveyor’s fees). This is assuming a sale value of £600k. The calculator is on the Leasehold Advisory Service website. Section 42 statutory lease extension process gives you protections in law. It’s a risky proposition and you might find the mortgage difficult to secure. Could be worth it though!

Thanks, so, so much for this - I'd done a little bit of research and found out what "marriage value" was, but that's really useful.

Things are never simple, are they, but...we'll see - another bit of knowledge I'll need further down the road.

A shame Labour's plans have been delayed - this leaseholder nonsense should have been abolished decades ago - even with a tiny bit of knowledge you can see how it's used to keep wealth consolidated in the hands of those who already have plenty of it.

Even worse is the way the new builds of the past 20 odd years have exploited it to up ground rents and service charges exponentially on unsuspecting first time buyers. How do we allow this kind of thing to happen in our society?

Politicians either happily complicit or asleep at the wheel.

And breathe...anyhoo, another v kind MNer posted this useful link on this topic on another thread - I'll pop it here for the archives if anyone else might find it useful in the future

Lease advice