How does leasing work?

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  • landing
    replied
    Thanks but the problem with these calculators is that they ask you to put the price of the property AFTER the lease is extended. I do not know that, what I know is the price of the property NOW and also how many years lease are remaining. Any idea?

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  • aconnell
    replied
    1. Legally speaking, you need to own the flat for 2 years before you have the right. In many cases the landlord will informally agree a premium with you, outside of the statutory route.
    2. If you have not owned the flat for at least 2 years, yes - they can charge whatever they feel like. Otherwise, no.
    3. Instruct a surveyor or use an online lease extension calculator like this one, {link removed} , they all use a set formula based on the value of the flat, ground rent and remaining years.
    4. The standard is an additional 90 years on top of the existing term with no ground rent, but you can agree different terms if the landlord is willing.

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  • Gordon999
    replied
    If you want to do property extension, buy a property under freehold title.

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  • Macromia
    replied
    As Section20z has implied 'it depends!

    If you don't meet the requirements for a statutory lease extension, there is no obligation whatsoever for the freeholder to allow you to extend your lease - and if they do let you they can demand whatever they want.

    If you are entitled to a lease extension (one of the requirements being that you have owned the lease for at least two years before you apply), the freeholder can still demand whatever they want, but if you can't come to a mutually acceptable agreement you have the right to have a tribunal decide what the price should be (note that you will also be expected to pay the freeholder's reasonable surveyors and legal fees).

    The cost of a lease extension depends on various factors, including the amount of annual ground rent payable (and whether this will be reduced to zero or changed to a different amount), the number of years remaining on the existing lease and the value of the property.
    The shorter the current lease, the more the lease will increase in value, and the larger the reduction in any ground rate will be, the larger the premium for extending the lease is likely to be.

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  • Section20z
    replied
    1. No, after 2 years you normally aquire the right to a formal (statutory) extension. It's preferable for the vendor to initiate the process.
    2. They can ask whatever they want for an informal extension.
    3. Surveyors will mystify the process but values are basically guesswork. Try and find similar properties to compare to.
    4. Yes , but statutory route provides for 90 added years at nil ground rent

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  • landing
    started a topic How does leasing work?

    How does leasing work?

    Hello!

    1) If I buy a flat with a leasehold and I want to extend it, will I be 100% that I will be offered the chance to buy an extension or is it up to the freeholder or any other situation?
    2) If I am offered a lease extension, can the freeholder charge me anything they want or they need to charge me something that is considered a fair value for the extension?
    3) How can I calculate the lease extension cost if I do not know the value of the property AFTER the lease extension? I only know the value of the property NOW and how much lease is left NOW.
    4) Can I choose how long will be the lease extension that I can buy?

    Thanks!

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