1. What is Lease Extension Cost?

The lease extension cost calculates the price to extend a lease for a flat, considering ground rent, yield, additional years, and any premium. It's essential for leaseholders considering extending their lease term.

2. How Does the Calculator Work?

The calculator uses the lease extension formula:

Where:

• \( GR \) — Ground rent ($/year)
• \( Y \) — Yield (decimal)
• \( L \) — Additional lease years
• \( premium \) — Additional premium cost

Explanation: The formula calculates the present value of future ground rent payments plus any premium for the lease extension.

3. Importance of Lease Extension Calculation

Details: Accurate lease extension cost estimation is crucial for financial planning, property valuation, and negotiation with freeholders.

4. Using the Calculator

Tips: Enter ground rent in $/year, yield as decimal (e.g., 0.05 for 5%), additional years, and any premium. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is ground rent?
A: Ground rent is a regular payment made by a leaseholder to the freeholder of the property.

Q2: How is yield determined?
A: Yield is typically based on market rates for similar properties and lease terms, often between 4-8%.

Q3: Why extend a lease?
A: Extending a lease maintains property value, makes it easier to sell, and avoids escalating costs as the lease shortens.

Q4: When should I extend my lease?
A: Generally recommended when below 80-85 years remaining, as costs increase significantly below 80 years.

Q5: Is this calculation definitive?
A: This provides an estimate. Actual costs may vary based on negotiations, legal fees, and specific property factors.