Lease Extension - Residential

[rands09]

Hi, I have a flat in london with 72 years lease left. I purchased this property 5 years ago. I am aware that if your lease goes below 80 years than the premium would be quite high, because of the marraige value, etc and in addition I have to bear the costs of mine and the landlords surveyor/valuer and solicitor. I understand this is the standard procedure.

My question are their anyother landmarks period when it comes to lease extension, such as 80 years. Because, I am in a bit of a financial constraint and not in a position to spend (£12,500 - this is minimum amount I will incur if I go for lease extension today).

Does the preimum will increase considerably if I apply for lease extension after 2 years, ie will the premium go very high if the lease is below 70 ?? than if i renew now at 72 years left in the lease ??? the difference between 80 years and 79 is phenominal due to "marraige value" ..

someone must have some experience in this ..please let me have your view and your views will be highly regarded

 

[deniser]

Under 75 years and the value of your flat starts to decrease as mortgage lenders like at least 50 years plus the length of the mortgage which tradtionally is 25 years.

 

[Tellerman]

I realise this is an old thread but there are a few other threads of this nature and none have received a full answer. I hope this advice is not too late for you Rands09. If you have not done anything since your original post don't wait any longer. The longer you wait the more expensive it will get. Anyone with this sort of question should try and get a detailed answer from a registered professional who operates in their location otherwise you will not be getting correct estimates of market prices.

The 80 year threshold has a huge impact because 'marriage value' is incurred. One case I had involved a solicitors negligence due to an invalid s42 notice being served. I valued the premium in the region of £40,000 for a lease with a term of 80 years and 1 day. My valuation of the premium with 2 days less on the lease was about £80,000. However the premium continues to get more expensive as the lease declines and a two year delay can make a premium much more expensive if market values continue to rise. Coincidentally today I was asked by a lessee to update my report which was originally written four years ago in August 2009. the lease at the time had 60 years unexpired and the likely premium was then £50,000. Today with a lease of only 56 years, the premium is in the approximate region of £90,000. The sooner you serve your section 42 notice the sooner your lease length is frozen for the purposes of assessing the premium. The simple rule of thumb is: all things being equal, the shorter your lease, the more expensive the premium.

I act only in central London so the price differences quoted may not be as pronounced in other areas.