I am Interested in Buying a Flat but I am told it has only 75 years left on the Lease. How Accurate is the Realtor’s Estimate of £10,000 for a Lease Renewal?

by The Chartered Surveyor

Question

I am interested in buying a flat that is on the market for £249,950 but I am told it has only 75 years left on the lease. I was told by the realtor that the original asking price was £275,000 but they put it down due to the cost of the renewal, which they estimate at around £10,000.

According to all the articles I read, it is very difficult to assess how much the extension will cost, and, besides, I wouldn’t be able to do it unless I have lived in the flat for two years. I am thinking of letting the flat out to a friend, so I wouldn’t be living in it either. So, I just wanted your opinion in terms of whether I should pursue this flat or just let it be? I’m a first time buyer and I totally fell in love with it, but wouldn’t want to get into a bottomless pit as I haven’t got unlimited resources!

Answer

As you say, it is not possible to put a firm value on the lease extension without having seen the flat and the lease. I would say that the premium is likely to be more than the £10,000 discount offered.

You do not have to live in the property to qualify for a lease extension, but you do have to own it for two years. The only alternative to this is for the present owner to issue the notice now and then they can assign the notice to you when you buy the flat. This means that you can effectively extend the lease right away.