My Lease Extension Valuation – do I really need a specialist surveyor?
Absolutely. If you are thinking about extending the lease on your flat under the Leasehold Reform, Housing and Urban Development Act 1993 (as amended), then you really do need to get in touch with a specialist surveyor who regularly deals with lease extension valuations.
Why? Valuing a lease extension premium is extremely specialist work requiring a complex calculation which should be undertaken by a suitably qualified and experienced surveyor. Premium valuation work is outside the area of expertise of any solicitor, even one specialising in lease extension.
And getting the right valuation is critical – because if you don’t, you could end up paying more, sometimes much more, to extend your lease. This is particularly important because it highly likely that your freeholder will appoint their own surveyor to value the lease extension – and if you don’t have your own valuation, you have little to go on except that provided by the freeholder. And that valuation is probably going to be at the top end and likely to mean you end up paying over the odds to extend your lease
Need the right lease extension valuation? We can introduce you to the right surveyor from our national network of specialists as part of our one-stop shop service. Call us now on FREEPHONE 0800 1404544 for FREE initial phone advice.
How will a specialist lease extension surveyor help me?
Your valuer will advise you of two things,
- the first being the likely premium payable for the freehold and
- a lower figure to include in the Initial Notice to be offered for the freehold.
That offer figure will be intentionally lower so as to allow scope for negotiation. It is also critical that the offer figure is reasonable – as otherwise, the freeholder could claim that your Notice is invalid.
Marriage Value and Lease Extension
If the lease on your property has less than 80 years left and you want to extend it, then the Leasehold Reform Act of 1993 states that you have to pay an additional cost to the freeholder. This cost is known as the “marriage value” and there is a great deal of confusion around what it means and how it is calculated.
Click here to read an update about government plans to reform marriage value
How does Marriage Value work?
In basic terms, the “marriage value” is a difference in value for both the freeholder and leaseholder of the property with its 80 year lease, and the value of that lease if it is extended for another 90 years. It is called the marriage value as the value of the property plus the extended lease when they are “married” together is more than the value of just the property or the extended lease by itself.
According to legislation, the freeholder or the landlord is legally entitled to a share of this marriage value. In the past this share was open to negotiation, but is now fixed at 50%. The marriage value itself can vary according to the number of years which are left to run on the lease when the leaseholder decides to make their application. There is an unbreakable connection between the market value of the property and the length of the lease, so if the lease is allow to carry on decreasing, the property’s value will decrease too.
From a freeholder’s point of view, their 50% share of the marriage value gets larger the longer their leaseholder puts off applying for their lease extension after the 80 years milestone passes. Any delays in starting the ball rolling with a lease extension application can therefore be costly for the person making the application.
There are a couple of other important things to be aware of when it comes to lease extensions and marriage value.
- Marriage value only ever applies when you are going through a formal or statutory lease extension process.
- Also, as soon as the term left on the year drops below 80 years, even by a single day, marriage value comes into play. This is worth bearing in mind if your lease is getting perilously close the 80 year mark as delays could end up costing you thousands.
Remember that the marriage value for extending a lease which has more than 80 years to run is set at 0%.
Marriage Value – 3 Golden Rules
If there are three “golden rules” to take away from the whole topic of marriage value they are:
1. Never put off extending your lease. A canny leaseholder will make sure to start the process of extending their lease well before the 80 year mark starting looming on the horizon.
2. As soon as marriage value comes into play it will cost a lot more to extend the lease and is financially much better for your freeholder. It is not unheard of for freeholders to drag their feet over the process if the 80 year deadline isn’t too far away in the hope of getting more money.
3. If you’re in a property where the lease has already dropped below 80 years, every month you delay extending the lease is costing you money and increasing the marriage value.
This can be a complex area of property law, so seek the advice of a specialist lease extension solicitor who can guide you through the process, making sure you keep expenses to a minimum and avoid traps.
Finding the right specialist surveyor for your valuation
Only a few surveyors have the right specialist experience to value your premium accurately.
Most surveyors, while they are more than competent at routine valuation work, simply have little idea or practical experience of the specific calculations and factors involved when valuing the premium for a leasehold extension. Choosing a surveyor with plenty of practical experience of leasehold extension premium valuation and negotiation is simply essential.
Using a professional expert witness at the First-Tier Property Tribunal
If negotiations between the freeholder and the leaseholder end in stalemate, the leaseholder’s solicitor will then put the case to the Leasehold Valuation Tribunal. Fortunately, in our experience, around 95% of negotiations are eventually successful, with just a few needing an application to the “First-Tier Tribunal – Property Chamber (Residential Property) for an independent review of the right premium to be paid. (The FTT was previously known as the Leasehold Valuation Tribunal or LVT)
During the Tribunal the surveyor has the role of acting as an expert witness by preparing and presenting the evidence.
In Need Of A Specialist Lease Extension Valuation? We Can Help
Over the last two decades, our specialist lease extension and enfranchisement team have helped thousands of lease owners in extending the remaining term of their lease. As a result, we have built up a network of specialist lease extensions surveyors nationwide.
These are surveyors with whom we have worked and who we have found to really understand issues surrounding valuation – and to provide clear and accurate written reports. What’s more, we regularly review our informal panel, to make sure we have the right surveyor for your valuation.
So wherever your flat is in England and Wales, our team can sort out the legal side – and, if you wish, also arrange to appoint, on your behalf, a surveyor who really understands how to properly value your lease extension premium.
• Just call us on FREEPHONE 0800 1404544 for a FREE initial phone consultation and a FREE no obligation quote for extending your lease OR
• Complete the contact form below