Ive had an offer of 425k accepted on a flat in london with a 78 yr lease. I know the cost of extending the lease will be large as its under 80 yrs. (presuming 76yrs by the time I am allowed to serve notice)
I have estimated a figure of 10-15k (inc legal fees etc) presuming what I am paying is an accurate valuation and the ground rent is 150 a yr. Is this way too optimistic? Im about to pay for a survey to be done and am desperate to find out before throwing money away if this ends up to be an expensive mess!
1. If you read some of the past threads in this section, you will find some advice about getting the vendor to serve Notice now and assign the interest to new lessee. This will save you having to pay extra for extension of 76 year lease after 2 years time compared to extension now. You need to employ a conveyancing solicitor with good experience of leasehold extension work, if you decide to proceed.
2. For extension to a lease below 80 years, the price payable to freeholder will include a sum equal to half the gain in market value above the present value ( i.e difference in property value for lease at 76 years paying 150 p.a ground rent and for a new lease on 76+90 years at peppercorn ground rent) and you need to consult a local area based chartered surveyor to give you this market valuation in writing. Factors such as the lack of car parking space or congestion charge or excessive high service charge or old building lift problems or extortionate managing agent may affect the valuation.
Based on 76 years I would suggest closer to £30,000 for a new 167 year lease, including your legal costs and those of the Landlord. The extra two years might cost you around £2,500 more than doing it with 78 years left.
Using the result of Cadogan V Sportilli of 5% for the reversion and assuming a relativity of 97% for a 78 year lease and assuming ground rent is £100 per annum rising every 33 years I would be very confident in stating the cost of a lease extentsion would be of the order of £13,000 plus costs.
This would be for a 90 years extebntsion and a peppercorn rent.
You could of course offer to pay a ground rent and negotiate a lower premium ie go outside the act.
Im looking at buying a 2 bed flat conversion in leyton/stratford
for 200 k, hoverver the lease is 76 years and the seller brought this proprty from auction and he is selling it and he is paying 5% of my depoist and stamp duty.
anyway he was also going to offer 100 years on the lease , but unfortuately cant locate the freeholder and he has been absent, my solicistor said that if the freeholder doent turn up in 6 years then i become the freeholder,
what happens if he does turn up, how much would it be to extend the lease?
what if he doenst turn up , how difficult is it to become the freeholder?