What is the cost of renewing a lease?
Q A year ago I bought a flat in London with an unexpired lease of 83 years. I have heard that the cost of renewing the lease increases significantly when the time remaining on it is less than 80 years. Is that true? I also understand that to be eligible to extend a lease I would need to have owned the flat for at least two years. Therefore, if I want to extend the lease before it has less than 80 years left I would only have a year to do it. Is that sufficient time?
A Yes, it can be true that the cost of renewing a lease increases - although not necessarily significantly - if there are less than 80 years until it expires. This is broadly because the sums involved in calculating the cost of extending it must include what is called a "marriage value". This is the increase in the value of the
property that will arise as a result of extending the lease.
However, if there are more than 80 years left on the lease you don't need to worry about the marriage value, because legislation stipulates it is zero.
You are also right in thinking that you have to have owned your leasehold flat for at least two years before being eligible to extend the lease. And as the process typically takes between two and six months, you should easily be able to complete the process in less than a year.
You can get more detailed information on the kind of things you should be finding out before applying to extend the lease - and what is taken into account when calculating the value of an extension - from the Leasehold Advisory Service .
· This article was amended on Friday February 22 2008 to correct a mistake that appeared in the original version.Source: www.theguardian.com