Updating post from Reddit.
Hello - a very standard question here.
I'm really hoping for a friendly sense check, and wondered which way people think I should go...
I have a flat with 83 years left on the lease and a ground rent of £10.
The option to extend has only just become available.
If I do it now -
1. Marriage Value
I will avoid getting tangled up in the sub-80 year Marriage Value issue.
2. Lease Length
I can only extend it by 90 years (but not 990). Which doesn't sound as sexy when I sell in 25 years.
3. Refinancing
I will increase the value of the flat ahead of a planned refinance, so can pull more money out.
4. Lease Premium / Deferment Rate
I know what the Deferment Rate is, and so what the lease premium will be (£8,000).
5. Freeholder's Legal Fees
I will pay the freeholder's legal fees of £2,000.
If I wait until all the legislation has gone through -
(Let's be pessimistic and assume 4 years from now, so the lease has dipped down to 79 years)...
1. Marriage Value
I still won't get tangled up in Marriage Value because that will almost certainly have been scrapped. So the difference between 83 years and 79 years won't actually have a dramatic impact on the lease premium. (Is this right?? It's my best understanding).
2. Lease Length
I can extend it by 990 years, which just sounds more attractive to future buyers (I intend to sell up in 25 years). I don't mind about 90 vs 990, I just know that buyers can often be irrational and uneducated).
3. Refinancing
I will have to refinance now, with the value of the flat held down a little bit by the 83 year lease. (So I can borrow less against it).
4. Lease Premium / Deferment Rate
I don't know what the Deferment Rate will be, and this is the big variable. Given that I'm at 83 years right now, with a ground rent of £10, this is one of the few cases where the lease premium could well go UP after the legislation goes through.
5. Freeholder's Legal Fees
I probably won't have to pay my freeholder's legal fees (there's some debate here).
I honestly don't know which way to go!
Any thoughts would be appreciated :-)
I would do it now. Don’t wait on the government if you can avoid it. I’d pay it if I was in your position. I’m waiting with a 53 year lease but only to see what happens in 2026. You can currently avoid marriage value.
Yes, I'm tending in this direction. Thank you.
I had thought the government was going to make it cheaper to extend by getting rid of marriage value ?
Yes, but when?
I want to wait two years to see if Labour does what they promised. I know the Conservatives made the same promise and never delivered, so I wouldn't put much weight in that, but...
>I will increase the value of the flat ahead of a planned refinance, so can pull more money out.
Have you asked a RICS valuer how much it will increase the value? It could be the deciding factor if you intend to release equity.
Ah - thanks for that thought re. a RICS valuer. I will dig into that one - much appreciated.
waiting for any government to bother changing any regulations could be a long wait. If you are planning to sell any time soon then the short lease is likely to be a problem. If you plan to stay there then that’s not such an issue