Lease Extension Estimate

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    Lease Extension Estimate

    Lease Term Remaining: 65Yrs
    Ground Rent: Nil
    Unextended Lease Value: £125k (based on very similar sale in 2020)
    Location: Outside London

    Could someone kindly help estimate the lease extension cost for the above?

    I believe it to be approximately £12k including marriage value and assuming a 5% discount rate.

    Your estimate is about right , I have assumed the flat would be worth around £140k if it had a very long leases - that is the value used in the formula


      The four variables

      1) Capitalisation rate - not applicable as ground rent nil

      2) Deferment rate - 5% is applied in almost all cases and if you use that then that will not be challenged

      3) Value of the flat with a long lease - at 65 yrs the impact on the reversion is 4.2% so a difference of £10,000 in the flat's value will impact on the reversion by some £412

      4) Real-world figures are of course tainted with the fact that buyers pay more than in the "no act world" as they know they have the right to extend. The value of the flat has to be done in the no-act world. This of course is difficult to estimate and needless to say there are a wide range of values


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