LSE News:
People may be overpaying for lease extensions says LSE research
11 July 2017
People may be paying too high a price to extend the leases on their homes according to new research from the LSE. The research, forthcoming in The Economic Journal(1), suggests that current leasehold extension practices underestimate the value of many leasehold properties. Dr Ted Pinchbeck, a Fellow in Real Estate Economics and Finance at LSE and one of the authors of the research, said: “Prices of leaseholds of different lengths provide direct new evidence on how people discount the very far future. Our results support the use of a time-declining discount rate, which is used for policy evaluation here in the UK, but not everywhere in the world. This kind of discount rate implies that people are actually willing to pay more or take action now to improve things in the distant future.
Related publications
‘The Time Value of Housing: Historical Evidence from London Residential Leases’, Philippe Bracke, Ted Pinchbeck and James Wyatt, SERC Discussion Paper No.168, December 2014
http://www.spatialeconomics.ac.uk/textonly/serc/publications/download/sercdp0168.pdf
'The Time Value of Housing: Historical Evidence on Discount Rates', Philippe Bracke, Ted Pinchbeck and James Wyatt, The Economic Journal, 21 March 2017