Are leaseholds worth no value at the end of lease?

Are leaseholds worth no value at the end of lease?

11:19 AM, 10th January 2014, About 10 years ago 29

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I was wondering what happens with leases when they reach the last year of the lease, the lease I am interested in is a 123 years lease on a 1 bed flat in London, the original lease was for 125 years so was recently granted? Obviously I will not be around at that time of the end of the lease but for my family that will inherit this flat, would the value of the flat at the end of the lease be zero. This is all based on the assumption that the freeholder for some reason does not wish to grant me an extension as I do realise that some freeholders will extend if you are prepared to pay for the extension.

I am just looking at the worse case scenario where the freeholder will not offer an extension. Are leaseholds worth no value at the end of lease

Many thanks


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Mark Alexander - Founder of Property118

11:23 AM, 10th January 2014, About 10 years ago

Hi Marcus

The good news is that freeholders are compelled to offer you a lease extension if you want one, i.e. they have no choice, it's your right to purchase an extension. There are also rules to protect you in terms of how much can be charged by the freeholder.

The bad news is that if the lease is never extended, the property will be valueless. Also, the shorter the outstanding lease is, the less mortgageable the property becomes. As a rule of thumb, it starts to get very difficult to get a mortgage on a property with less that 70 years remaining on the lease.

For a guide to the costs of obtaining a lease extension see >>>

Fed Up Landlord

11:34 AM, 10th January 2014, About 10 years ago


Mark puts it very well and is spot on. The optimum time to extend the lease is before there is 80 years left. After this point then "marriage value" is taken into account. So if you have 123 years left then I would not be too worried. The worst situation is when the lease is very short then it will cost you. One of mine is just on a 60 year lease and will cost £8,000 in fees and premium for the extension up to 150 years. If you extend before the 80 years kicks in then the cost will be minimal.

The Freeholder does not like to extend as the shorter the lease the more money they make. But I reiterate - at 123 years you do not have to worry for about 40 years!!


Mike W

11:50 AM, 10th January 2014, About 10 years ago


Your post indicates you need to read up on the subject. I found the Leasehold Advisory Service - free government advice - extremely helpful. Once you understand the ownership construction then everything falls into place. Unfortunately there are some sharks out there that can and do take advantage but with reasonable people and reasonable laws it can work well. Generally you find a lot of people get into leasehold without knowing the basics.

I helped my daughter buy a leasehold flat in London last year and I then knew nothing about leasehold. It was a more complicated purchase because my daughter wanted to make changes to the flat which required freeholder approval. You then must have a good lawyer who can explain things to you. It can come as a shock to find that you are unable to change the position of walls and run new electric cables without freeholder permission and that permission may cost you!

But the good news is that with 100+ years left getting an extension of another 100 years is easy and won't cost too much. My daughter was told to wait until there were 100 years left then go for an extension (which has to be granted) and the price is governed by simple rules.

Marcus Taylor

12:34 PM, 10th January 2014, About 10 years ago

Thanks so much for all your posts, really appreciate it! Does anyone know what happens after the end of the extension of the 90 years. So say I have 60 years remaining on the original lease and renew for a further 90 years giving me 150 years, then as the lease runs down again to say 80 years do I renew again? Obviously future generations would renew but I am just trying to understand the principle of how it works. For a freeholder this situation is easier as it simply belongs to you or your heirs forever.

Thanks once again

Mark Alexander - Founder of Property118

12:52 PM, 10th January 2014, About 10 years ago

Reply to the comment left by "Marcus Taylor" at "10/01/2014 - 12:34":

The rights to extend remain and can be applied many times. Therefore, your property could theoretically still be owned by your family in hundreds of years time.


12:55 PM, 10th January 2014, About 10 years ago

Hi Marcus,
Yes, if the lease runs down to 80 years again, then the future generation would just extend the lease again.
Even better - their may be a chance at some stage in the future to purchase the freehold of the building in conjunction with the leaseholders of the other flats. So long as your lease has more than 80 years remaining at that time, the cost to purchase your share will be relatively little. There are various hoops/criteria to jump through all of which are reasonable/common sense, but assuming the criteria are met, the existing freeholder cannot refuse to sell it to you. Once the freehold has been acquired, you amend/renew all of the existing leases to 999 years and abolish ground rent etc. Even though you own a share of the freehold, you still have a lease as such because it spells out the rules/regulations of how the building works/maintenance/duties etc. so that everyone lives in the building in harmony and knows what is expected of them. However, because you own your freehold share, AND the lease of the flat, the value of the flat does not depreciate in the same way as the lease gets shorter - not that you will be here in 950 years time to worry about it.!!!
I have been through this process twice and it as the best thing I did and meant that I got rid of an obnoxious London landlord in both cases.
Good luck.!

Marcus Taylor

13:07 PM, 10th January 2014, About 10 years ago

Thanks Mark and Graeme again much appreciated.

Marcus Taylor

13:16 PM, 10th January 2014, About 10 years ago

And I guess lease extensions are not dependant or contingent on the lease holder having to reside in the flat? So if I was renting the flat out or my heirs to the flat were renting it out, they would still have the right to extend the lease?

Many thanks

Paul Willetts

13:44 PM, 10th January 2014, About 10 years ago

Hi Marcus, Sound advice above, as always.

Just a little caveat. Look into the lease-holding company. I have a flat (purpose built in a block of 8 and there are 5 blocks)... In the lease, each flat owner is a 1/40th share-holder in the maintenance company. So, essentially, all of the owners of each flat, collectively own the lease-hold company. Last year, we voted to extend our leases at no cost to us (apart from legal fees).

So we have now increased from 60 years to 125 and only paid a minimal amount.

Mark Alexander - Founder of Property118

13:45 PM, 10th January 2014, About 10 years ago

Reply to the comment left by "Marcus Taylor" at "10/01/2014 - 13:16":

Yes, that's correct.

Always read the lease yourself and take professional advice though. You may not be able to rent the flat out to just anybody you like and you will invariably require consent from the freeholder for which they will charge a fee. This fee should be no more than £40 but some freeholder will try it on in respect of charging a lot more. There is case law now to challenge this if they do.

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