I am aware that a number of members are seeking estimates for the cost of lease extension/ purchase of the freehold. Therefore I am posting TWO threads, one that provides a rough and ready simple calculation and another which provides a more precise calculation.

The first therefore gives an indication of the sort of money you may be looking at. If you then start negotiations yourself with your freeholder and his offer is unrealistic I would suggest it is worth trying to prepare the calculation as accurately as possible using the procedure set out in the second thread as this will help in the credibility of your argument and may push negotiations into more sensible territory.

The rough calculation:

For this you need to know the following:-

1) The ground rent and any rises

2) Value of your flat if it had a long lease and negligible ground rent

3) Term remaining

There are THREE parts and the premium for the lease extension is the sum of those THREE parts

1) Take the ground rent if fixed simply times the annual figure by 15. If the ground rent rises periodically simply times the current annual figure by 18

2) Take the value of the flat and then divide it by the figure in column A in the table below. (Always round down the term so 74.5 years remaining look up 74)

3) Take the value of the flat and apply the % in column B below and from that deduct the result in 1 and 2 above. Take the result and take 50% of that figure (only if positive). (Always round down the term so 74.5 years remaining look up 74)

The premium payable is the sum of all three steps

85.00 …………………. 63.25 …………………. 0.00%

84.00 …………………. 60.24 …………………. 0.00%

83.00 …………………. 57.37 …………………. 0.00%

82.00 …………………. 54.64 …………………. 0.00%

81.00 …………………. 52.04 …………………. 0.00%

80.00 …………………. 49.56 …………………. 0.00%

79.00 …………………. 47.20 …………………. 3.00%

78.00 …………………. 44.95 …………………. 3.00%

77.00 …………………. 42.81 …………………. 3.00%

76.00 …………………. 40.77 …………………. 3.00%

75.00 …………………. 38.83 …………………. 5.00%

74.00 …………………. 36.98 …………………. 6.00%

72.00 …………………. 33.55 …………………. 8.00%

71.00 …………………. 31.95 …………………. 9.00%

70.00 …………………. 30.43 …………………. 10.00%

69.00 …………………. 28.98 …………………. 10.30%

68.00 …………………. 27.60 …………………. 10.60%

67.00 …………………. 26.28 …………………. 10.90%

66.00 …………………. 25.03 …………………. 11.20%

65.00 …………………. 23.84 …………………. 11.50%

64.00 …………………. 22.70 …………………. 11.80%

63.00 …………………. 21.62 …………………. 12.10%

62.00 …………………. 20.59 …………………. 12.40%

61.00 …………………. 19.61 …………………. 12.70%

60.00 …………………. 18.68 …………………. 13.00%

59.00 …………………. 17.79 …………………. 13.70%

58.00 …………………. 16.94 …………………. 14.40%

57.00 …………………. 16.14 …………………. 15.10%

56.00 …………………. 15.37 …………………. 15.80%

55.00 …………………. 14.64 …………………. 16.50%

54.00 …………………. 13.94 …………………. 17.20%

53.00 …………………. 13.27 …………………. 17.90%

52.00 …………………. 12.64 …………………. 18.60%

51.00 …………………. 12.04 …………………. 19.30%

50.00 …………………. 11.47 …………………. 20.00%

So for example a lease of 73.25 years remaining. Ground rent £30 per annum for first 33 years £60 for the next 33 years and £90 for teh final 33 years remaining. Flat worth £180k if it had a long lease

Step 1 - Ground rent of £30 X 18 (as it rises) =

Step 2 - £180k divided by 35.22 =

Step 3 - £180k X 7% = £12,600 less £540 less £5111 = £6949 X 50% =

Premium payable = £540 + £5,111 + £3,475 = £9,126 for a 90 year ext with the ground rent falling to a peppercorn

The first therefore gives an indication of the sort of money you may be looking at. If you then start negotiations yourself with your freeholder and his offer is unrealistic I would suggest it is worth trying to prepare the calculation as accurately as possible using the procedure set out in the second thread as this will help in the credibility of your argument and may push negotiations into more sensible territory.

The rough calculation:

For this you need to know the following:-

1) The ground rent and any rises

2) Value of your flat if it had a long lease and negligible ground rent

3) Term remaining

There are THREE parts and the premium for the lease extension is the sum of those THREE parts

1) Take the ground rent if fixed simply times the annual figure by 15. If the ground rent rises periodically simply times the current annual figure by 18

2) Take the value of the flat and then divide it by the figure in column A in the table below. (Always round down the term so 74.5 years remaining look up 74)

3) Take the value of the flat and apply the % in column B below and from that deduct the result in 1 and 2 above. Take the result and take 50% of that figure (only if positive). (Always round down the term so 74.5 years remaining look up 74)

The premium payable is the sum of all three steps

**Years remaining......A.........................B**85.00 …………………. 63.25 …………………. 0.00%

84.00 …………………. 60.24 …………………. 0.00%

83.00 …………………. 57.37 …………………. 0.00%

82.00 …………………. 54.64 …………………. 0.00%

81.00 …………………. 52.04 …………………. 0.00%

80.00 …………………. 49.56 …………………. 0.00%

79.00 …………………. 47.20 …………………. 3.00%

78.00 …………………. 44.95 …………………. 3.00%

77.00 …………………. 42.81 …………………. 3.00%

76.00 …………………. 40.77 …………………. 3.00%

75.00 …………………. 38.83 …………………. 5.00%

74.00 …………………. 36.98 …………………. 6.00%

**73.00 …......……. 35.22 …............ 7.00%**72.00 …………………. 33.55 …………………. 8.00%

71.00 …………………. 31.95 …………………. 9.00%

70.00 …………………. 30.43 …………………. 10.00%

69.00 …………………. 28.98 …………………. 10.30%

68.00 …………………. 27.60 …………………. 10.60%

67.00 …………………. 26.28 …………………. 10.90%

66.00 …………………. 25.03 …………………. 11.20%

65.00 …………………. 23.84 …………………. 11.50%

64.00 …………………. 22.70 …………………. 11.80%

63.00 …………………. 21.62 …………………. 12.10%

62.00 …………………. 20.59 …………………. 12.40%

61.00 …………………. 19.61 …………………. 12.70%

60.00 …………………. 18.68 …………………. 13.00%

59.00 …………………. 17.79 …………………. 13.70%

58.00 …………………. 16.94 …………………. 14.40%

57.00 …………………. 16.14 …………………. 15.10%

56.00 …………………. 15.37 …………………. 15.80%

55.00 …………………. 14.64 …………………. 16.50%

54.00 …………………. 13.94 …………………. 17.20%

53.00 …………………. 13.27 …………………. 17.90%

52.00 …………………. 12.64 …………………. 18.60%

51.00 …………………. 12.04 …………………. 19.30%

50.00 …………………. 11.47 …………………. 20.00%

So for example a lease of 73.25 years remaining. Ground rent £30 per annum for first 33 years £60 for the next 33 years and £90 for teh final 33 years remaining. Flat worth £180k if it had a long lease

Step 1 - Ground rent of £30 X 18 (as it rises) =

**£540**Step 2 - £180k divided by 35.22 =

**£5,111**Step 3 - £180k X 7% = £12,600 less £540 less £5111 = £6949 X 50% =

**£3,475**Premium payable = £540 + £5,111 + £3,475 = £9,126 for a 90 year ext with the ground rent falling to a peppercorn

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