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Extending a Lease Calculator - Get Accurate Estimation
How to calculate the cost of a lease extension?
To calculate the cost of a lease extension, you can utilize various methods, including online calculators and professional services. Here's a step-by-step guide on how to calculate the cost of a lease extension
- Gather relevant information: Collect the necessary details about your lease, such as the current lease term, remaining years on the lease, ground rent, and any other relevant information. Additionally, determine the property's value and the estimated cost of improvements.
- Online lease extension calculators: One convenient way to estimate the cost is by using online lease extension calculators. These tools are designed to provide an estimate based on specific inputs. You can search for "extension of lease calculator," "extending a lease calculator," "leasehold extension calculator," or "RICS lease extension calculator" online to find suitable calculators provided by reputable sources. RICS (Royal Institution of Chartered Surveyors) is a professional body that offers guidance on property-related matters.
- Professional advice: While online calculators can offer estimates, it's crucial to seek professional advice from surveyors or solicitors who specialize in lease extensions. They can provide accurate and tailored calculations based on your specific circumstances. RICS approved professionals, in particular, can offer expert guidance and valuations.
- Factors affecting the cost: The cost of a lease extension can vary depending on several factors, such as the length of the extension, ground rent, property value, and any improvements or alterations made. Other considerations may include legal fees, valuation costs, and potential negotiation fees.
- Length of the extension: Refers to the number of additional years you want to add to your lease. When extending a lease, you typically negotiate with the freeholder (landlord) to determine how many extra years you can obtain.
- Ground rent: It's a regular payment made by the leaseholder (you) to the freeholder for occupying the land. Ground rent is usually specified in the lease agreement and can be a fixed amount or a percentage of the property's value. When calculating the lease extension cost, the amount of ground rent and its future value are considered.
- Property value: This refers to the estimated worth of your property. It's an important factor in lease extension calculations as it affects the premium you pay for the lease extension. The property value can be determined by considering factors such as location, size, condition, comparable sales in the area, and other market factors.
- These terms interact with each other to determine the cost of extending a lease. For example, the longer the lease extension, the higher the potential cost. Similarly, higher ground rents or more valuable properties can also impact the overall cost. Consulting with professionals experienced in lease extensions, such as surveyors or solicitors, can help you understand how these factors specifically apply to your situation and provide accurate cost estimates.
- Statutory lease extension: If you are pursuing a statutory lease extension, the cost calculation follows a specific formula outlined in the Leasehold Reform, Housing, and Urban Development Act 1993 (for leases in England and Wales). This formula considers factors such as the property value, ground rent, and the number of years added to the lease.
Remember, lease extension calculations can be complex, and it's advisable to consult with professionals who have expertise in this area. They can provide accurate estimates and guide you through the process to ensure you make informed decisions.
FAQs for Extension of Lease Calculator
Before thinking of extending your lease you must establish whether or not you can extend it? Under the 1993 Leasehold Reform Act, almost all flat-owners are legally allowed to extend their lease for an additional 90 years. In order to be legally entitled to an extension, you must have owned the flat for at least two years. You don't have to live there, just own it. The shorter the remaining lease length the more the cost will be to extend it.
If you have less than 80 years left, the value added to the flat by extending the lease could be much more than just the cost of extending it. There's no urgency for those who have 90 years or more. However, you should start thinking about extending your lease, once your lease reaches 83 years.
Once your lease drops below 80 years then the cost for extending becomes even more expensive. That's because you will pay 50 percent of the 'marriage value' of the flat on top of the usual lease extension price after that. Marriage value is the amount of added value a lease extension will also add to your property.
You will need to provide various information about the property in order to undertake a calculation. This information is listed below.
- The lease length remaining
- Ground rent payable and when it changes
- Value of your property
The cost of extending a lease is partially tied to the property's value. Once the lease falls below 80 years, the landlord is entitled to receive 50 percent of the increase in property value also called "marriage value" that makes extending a short period lease more expensive.
In addition to the cost of extending the lease, leaseholders should factor in other expenses such as solicitors' legal costs and surveyors fees. The tenant must pay the legal and surveying fees of both the freeholders and their own so that these fees can add up to a considerable amount
The price depends upon several factors, including the value of the flat, the length of the lease and the ground rent. It also depends on the negotiation. It should be kept in mind that leasehold legislation is hideously complicated so that costs can vary massively.
You'll need to pay your surveyor’s fees, as well as freeholder's surveyor’s fees. Typically, surveyor’s fees are £ 400 to £900 and so it is wise to shop around and get quotes from different surveyors.
The lease extension valuation calculator on our website will give you a general estimate of the cost for a flat lease extension. These valuations are based on generically available data and do not take into account local factors which may affect the premium. It cannot give you the exact costs. The eventual cost of the new lease will be the premium plus the "reasonable" professional costs both your own and of the property owner. These costs could be significant, so be sure to get estimates from the professionals involved such as solicitors and surveyors before you decide to proceed.
