Extending a lease can help protect a property’s value, but the way costs are calculated is not always straightforward at first glance. Leasehold extension costs are made up of several elements, each influenced by the property itself and the route taken to extend the lease.
The Lease Extension Premium
The main cost is the premium paid to the freeholder for adding extra years to the lease. This figure is based on factors such as the remaining lease length, the property’s market value, and the current ground rent. Generally, the shorter the lease, the higher the premium, as the extension significantly increases the property’s value. HomeOwners Alliance offers ways to boost your property’s value.
Valuation and Professional Fees
A specialist surveyor is usually instructed to calculate a fair premium. Valuation fees are separate from the premium and vary depending on the complexity of the property and negotiations involved. Legal fees also apply, as both the leaseholder and freeholder require solicitors. Leaseholders are normally responsible for their own legal costs as well as the freeholder’s reasonable fees. Many people choose to seek guidance from a London law firm experienced in leasehold matters like www.forsters.co.uk/ to ensure figures are accurate and properly assessed.
Statutory and Informal Extension Routes
Costs can differ slightly, depending on whether the extension is statutory or informal. Statutory extensions follow a set legal framework with defined terms, while informal extensions are negotiated directly with the freeholder.
Understanding how leasehold extension costs are calculated makes it easier to budget effectively and decide when to begin the process.