If you have bought a flat with a lease with 82-90 years remaining you need to be quickly thinking about a Lease Extension. The crucial time to extend is before you fall below the 80-year period, at which juncture it becomes a lot more expensive to obtain a Lease Extension.
Once a lease has less than 80 years to run it gets more expensive to extend, because any valuation of the lease extension takes into account what is known as the “marriage value“. This is arrived at by taking the value of the property before extension from its value after extension, and adding the landlord’s interest – typically the loss of income from ground rent for the remainder of the original term (as the whole of the new lease will be at a peppercorn rent).
But it is also worth bearing in mind that because this “marriage value” is split 50/50 between landlord and leaseholder, the cost of the lease extension should always be less than the increase in value created. So although you are spending more than you might have for a lease extension, you haven’t lost out because the increase in the value of your flat once the lease has been extended will be more than what you have spent.
For more information about your legal rights to a lease extension please speak to our lease extension team here at Fridaysmove