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Lease extensions - Frequently Asked Questions

Is the price I pay for my lease extension only based on market value?  

The price payable for your lease extension is partially based on market value. The valuation of premium paid is calculated according to a statutory formula. There is no requirement to have a formal valuation but this is recommended. The valuation of your lease extension is fixed as at the date of your s42 notice. It follows that if you were to serve your notice at time where the market is low such as now due to the Covid 19 Pandemic you will not be affected if prices increase.

Shall I wait for the reforms to become law rather than seek a lease extension now?

Legislation is never quick. It could take years for the recommendations to become law. Ultimately this could mean that the price you pay to extend your lease extension today may be no less cheap than in the near future. However, if your lease has less than 80 years, waiting another 2 or 3 years will certainly increase your lease extension premium if the reforms do not come into play. This will affect the value of the property and  if you are thinking of selling your flat in a few years then extend your lease so that you are not faced with agreeing a substantial discount on your sale price due to the length of your lease.  


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