You will see if you search on the internet free online calculators which help you work out how much your lease extension will cost you. However, these are not always the most reliable tools to work from as each individual lease extension involves different factors which affect cost. They are nonetheless a good starting point for a generic lease extension.
The cost of a leasehold extension is composed of 3 separate parts. The first and second aspects rely on exactly what the landlord demands as they are dependent on the compensation you will have to pay. The compensation is made from two different amounts, firstly the amount of money the landlord will lose by not having access to his freehold interest and secondly the loss of ground rent he will also suffer.
You must also be aware that any lease which has less than 80 years left to run will incur the additional charge of ‘marriage value’. This will make your lease extension a lot more expensive, the amount is worked out using the value of your property pre-extension and how much it is worth afterwards, it works out the loss the landlord is suffering due to losing his freehold interest. This marriage value can have a serious effect on the cost of an extension and can make it a lot more expensive. This additional money often puts leaseholders off from getting an extension.
Therefore in knowing this information you can see that if your lease has 30 or 40 years left to run it is going to cost this additional marriage value and therefore be quite costly. However around 60 years plus the cost will be more reasonable and 80 years plus quite low. The longer the lease you currently have the cheaper your extension will be.
On top of these costs you will also have to fund a valuer (or surveyor) to evaluate your lease in order to get a figure for the landlord’s compensation. On top of this you will need to seek advice from a specialist lawyer, which will cost you legal fees. You must however make sure that you are appointing a lease extension specialist as most everyday solicitors will not have the right sort of experience. You are also responsible for the landlord’s legal costs. So although the compensation amount is really key, you must be aware of all these additional costs so that you remain on top of how much the process is really going to cost you.