67 yrs unexpired- cost of extension

[70% of take home on rent]

My partner and I have found a flat we are interested in buying.

The cost is £118,000 but the estate agent has said that there is 67 years of the lease left so they are asking for a further £8000.00 to extend it.

Can someone explain clearly to me what this means?

Thank you all again

Jim

[tenant29]

1. UK leasehold property contracts ( The Leases) are written on unfair terms for the tenant whereby the property always belongs to the landlord /freeholder and the tenant just rents the property on a longterm basis and has to hand back the property upon expiry of the lease term. So the Lease is reallly just a longterm rental contract which is registered at Land Registry , secured by mortgage lending and title holder can be transferred to another party.

2. Whilst mortgage lenders are willing to lend on Leasehold property title , many companies seem reluctant to offer high percentage loans on property below 80 years due to a higher risk of falling values of the security backing the loan under poor market conditions. To overcome this problem, the law allows the tenant to obtain a 90 year extension of the lease at a peppercorn annual ground rent. The cost of the 90 year extension will include cost of remaining ground rent payable over 67 years calculated back to present value + half the gain in market value ( between a 67 year flat and 157 year flat). Some estate agents have Chartered Surveyors who can advise better on the cost of lease extension..

3. You need to get a written quote for lease extension as the offer may not be under the same conditions ( e.g asking higher ground rent )as the one which you can seek a value judged by the Leasehold Valuation Tribunal. Quite often , buyers may insist that the extension is obtained by the existing tenant as a condition inserted in the sale contract because of a legal requirement that the tenant must be a leaseholder for 2 years before applyoing for extension.

4. The "gain in value" between the 67 year lease and 157 year lease is called the "marriage value ". An organisation call CARL ( www.carl.org.uk) is campaigning to abolish marriage value and the Leasehold system and it should be supported by all leaseholders.