Is it likely to cost anymore to my freehold then extend my lease?

by The Chartered Surveyor

Question

I need to extend my lease but also wish to consider buying the freehold with my neighbour who lives downstairs. Is it likely to cost a little more than an extension or would I be looking at paying a lot more?

Answer

The answer to this, as you have alluded to, can either be very little more or substantially more. The main difference between a lease extension and a freehold acquisition is that with the latter you need to consider the whole of the freehold entity as opposed to the smaller and singular leasehold demise of your respective flat.

The three most common areas that need to be considered are loft spaces, basements and the grounds of the building itself with the question to be asked being ‘what value could the freeholder expect to realise if these areas where to be developed’.

In most instances the front and rear gardens will be owned/demised to the flats in the building or be communally shared. If this is the case no additional compensation is due.

If the loft space is not demised to your top floor flat (and thus is demised to the freeholder) your surveyor will have to establish what potential profit could be realised from that your undertaking a loft conversion. If the owner of the ground floor flat could make a profit from digging down and creating habitable basement space the same principle would apply although this is only usually applicable in Prime Central London.

As you can see each of these instances needs to be individually valued and owing each individual situation such developments can be deemed infeasible and non profit making on the one hand or result in substantial compensation on the other.

Your initial conversation with a chartered leasehold valuation surveyor should be able to establish the likelihood of this before you go ahead and instruct them.