When calculating the cost to extend the lease, several factors impact the process. For example, you have to factor in the premium paid to the freeholder, the marriage value of the property, land registry fees, and your legal and valuation costs alongside those of the freeholders.
When extending your lease, you are required by law to pay for your freeholder’s legal and valuation costs. You should aim to extend the lease before it hits the 80-year mark or lower as the value of the lease increases once it falls to 80 years or below. If you do choose to extend the lease in this situation, you will have to pay 50% of the marriage value, which can be a significant number compared to if the lease is either between 80 and 90 years or more than 90 years. To add to this, calculating the cost of a lease extension premium is subjective and will vary according to each surveyor's interpretation and the solicitor’s fees.
You will have to have a new valuation carried out on the property if you intend to extend the lease, therefore you must also factor in the costs of hiring a surveyor. You should go to a qualified surveyor to calculate the property’s value. The surveyor should be registered with the Association of Leasehold Enfranchisement Practitioners (ALEP) and the Royal Institution of Chartered Surveyors (RICS).
Once you and your freeholder reach an agreement on the price of the lease extension, you will have to pay a deposit, which is normally 10% of the lease extension cost. If you and the freeholder can not agree on a price for the lease extension, you can refer the situation to a First-Tier Tribunal, who will decide what you need to pay for the extension.