The cost of a lease extension depends on various complex factors. We therefore like to break the cost of extending your lease down into five simple stages.
1) Your Legal Fees
You will need to instruct a solicitor who will charge to verify your qualifying criteria, send initial correspondence, draft and serve an initial notice, review your deed of variation and register it with the land registry. Their fees will depend on the value of your flat, whilst there may be extra charges if there is an intermediate landlord.
2) Your Valuation Fees
You will also need to appoint a surveyor to calculate the premium you will pay to the landlord for the lease extension and take care of the negotiations.
There are additional expenses to be covered, such as Land Registry searches, registering the service of notice with the Land Registry, First Class recorded delivery of all important documents, and the Land Registry fee to conclude the process.
This is the fee you pay to the landlord. The landlord is entitled to compensation because the lease extension reduces the value of their interest in the property.
The premium depends on the term (compensating the landlord for the loss of ground rent under the new lease), reversion (compensating the landlord for the impact the length of the lease has on their interest in the property) and marriage value (half the increase in the value of the property as a result of the lease extension).
It is a complex calculation which must be completed by a professional valuer. For a rough estimate, you may consult our lease extension calculator, but this simply provides a ballpark figure and we provide no guarantees as to its accuracy.
5) Landlord’s Legal/Valuation Fees
You are obligated to pay your landlord’s reasonable legal and valuation costs, which should be on a similar scale to your own. If these are too high you can challenge them at the First Tier Tribunal (FTT).