The Leasehold Advisory Service (LEASE) has warned "unwelcome chickens may be coming home to roost" for people who bought flats in the 1970s and 1980s on relatively short leases of 125 years. Under the Leasehold Reform Housing and Urban Development Act 1993, leaseholders have the right to extend their leases by 90 years, but the costs of doing so can jump dramatically once the unexpired term of the lease dips below 80 years.
The main reason the cost of extending a lease jumps so dramatically when only 80 years remain is that valuers must take into account marriage value. Under the Act, marriage value is defined as "the potential for increase in the value of the flat arising from the grant of the new lease" and requires that this "profit" be shared 50:50 between landlords and leaseholders.
Marriage value does not apply when the unexpired term is still over 80 years.
In calculating marriage value, the leaseholders' and landlord's valuers use local knowledge and experience to assess the increase in value of the flat arising from the new lease. However, you can get a ballpark idea of the cost of extending your lease by using the quick calculator on the LEASE website.
LEASE is funded by the Government to provide free legal advice to leaseholders, landlords, professional advisers, managers and others on the law affecting residential leasehold and commonhold. It also provides a mediation service.
You can receive advice by telephone (9:30am to 5.00pm Monday to Friday on 020 7374 5380), letter, email, or in person. LEASE even arranges seminars and group meetings where large numbers of leaseholders want to discuss a joint issue. It also publishes a wide range of free advice notes that are available on request or to download.
** Additional Information & Advice **
Alternatively, you may want to speak with a property law solicitor. You can find a solicitor in your area for free via solicitor matching services, which can also help you to understand the best course of action and whether you are ready to hire a solicitor.