Is extending the lease worth the money?

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    Is extending the lease worth the money?

    Can anyone advise please? I have had an offer accepted on a flat which I intend to buy and rent out. I intend to keep the property for at least 10 years. The other flats in the block seem to be owner/occupier and I have been advised that the lease is 79 years. I contacted the managing agents to see about extending the lease and they have quoted me £7,000.00 and advised that I need to request the current owner to do this through his solicitor.

    I am new to this so am a bit confused as to a/ whether spending £7,000 is worth doing and b/what to do next.

    If I don't intend to sell the property any time soon I guess the length of the lease is immaterial? I also understand (I think) that once I have owned it for 2 years i can extend the lease myself? Would it still cost me the same money or can I just do this?

    How can I find out whether the flat would be worth £7,000 more if the lease were extended from 79 -99 years? I rang the estate agent who seemed to think most of the flats in this area have 75-80 year leases because they are mainly Victorian houses which were converted in the 1980s.

    I don't want to start spending money and don't really understand the whole thing. I tried looking at but couldn't make head or tail of it and I need some advice using laymans terms if possible

    Under the law, any leaseholder ( of 2 or more years) can extend the existing lease by an additional 90 years at a peppercorn ground rent. For properties with below 80 years remaining on the lease , the cost of lease extension includes a sum for giving up the existing ground rent payments up to expiry date ( over 79 years) plus half the difference in value of your flat now at 79 years and the new value after extended lease to 169 years ( half the gain in value known as the marriage value ).

    If you buy now and left the extension of lease for 2 years later , then you may be required to pay more in marriage value as the method of calculating cost remains the same.

    Why don't you ask the existing seller ( assuming he/she has had the flat for over 2 years ) to include the "lease extension" in the sale price?


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