DO YOU OWN A FLAT IN A BUILDING WITH BUILDING SAFETY PROBLEMS?
DO YOU BENEFIT FROM THE LEASEHOLDER PROTECTIONS?
(1) ARE YOU THINKING OF EXTENDING YOUR LEASE?
- BEWARE!!
YOU COULD LOSE THE BENEFIT OF THOSE LEASEHOLDER PROTECTIONS!!
PLEASE SEE MY NOTE ON THIS ON MY APRIL 2023 LATEST NEWS PAGE VIA THE BELOW LINK:-
Why should I extend my Lease Term when there is still over 80 years remaining of the original Lease Term?
I mention in my Book, Leases Can Seriously Damage Your Wealth, that is it possible to seek an extension of the Lease Term even if there is still more than 80 years of the existing lease Term currently unexpired
Not many Landlords (if any) would voluntarily agree such an extension, so the Leaseholder will most likely need to use the Statutory Procedure (brief details of which are shown on my web site)
Assuming that your current remaining Term is 82 years, the statutory procedure will entitle you to an additional 90 years, meaning that the term of your Lease will then be 172 years – that length of term is likely to achieve the maximum valuation for your Flat (a term longer than 172 years would not be expected to increase such value)
Provided that you have available (or can obtain) the necessary funds to do so, then it might not be as daft as you think seeking such a Lease Extension now and there are very good reasons to do so:-
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Obtaining such an extension should increase the value of your Flat
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Once the Extension Lease is completed, there will then be no Ground Rent payable
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While the Lease term remains above 80 years, the method of calculating the price to be paid by you to the Landlord for the Lease Extension will not take into account ‘Marriage Value’ (i.e. the increase in value of the Flat once the term has been extended – that increase in value has to be shared with the Landlord) – once Marriage Value is taken into account then that will substantially increase the price you will have to pay to the Landlord – see the examples below
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As time goes by, your Lease term will reduce, whilst property values generally increase, which will lead to an increase in the price to be paid by you to the Landlord as and when you finally extend the Lease
Using the Leasehold Advisory Service Lease Extension Calculator (which only gives a very rough guide and does not take into the potential value of any Ground Rent reviews), the following differences can be seen for a Flat located outside the Prime Central London area, as between a Lease having a remaining term of over 80 years and one where it has less than 80 years remaining (when ‘marriage value’ will be taken into account)
A Flat having an estimated value of £200,000 after extension and with a current Ground Rent of £250 per annum, the price for a Lease extension is likely to be:-
Remaining Term over 80 years: £7,000 to £8,000
Remaining Term under 80 years: £19,000 to £20,000
Using the same basis for a Flat having an estimated value of £300,00 after extension (and with the same Ground Rent payable) would result in the following guide prices:-
Remaining Term over 80 years: £8,000 to £10,000
Remaining Term under 80 years: £27,000 to £29,000
Not so daft after all!
To see the 'Learn with Laurie' YouTube video guide:
"Why should I extend the Lease of my Flat, when there is still over 80 years left of the original Lease Term
Click the link below:
