Valuations - Extension of individual leases
What are the Leaseholder's rights?
The Leasehold Reform, Housing and Urban Development Act 1993, amended by the Commonhold and Leasehold Reform Act 2002 entitles a Leaseholder to purchase an extension of 90 years to the existing lease term at a peppercorn ground rent subject to the following:
- The Leaseholder must have owned the flat for the least 2 years
- The Leaseholder's original Lease term must be greater than 21 years
- The Leaseholder does not need to be resident in the flat
What is the cost of the Lease Extension?
This is assessed in three parts:
- the value of the ground rent income
- the value of the Freeholder's reversion at the end of the lease
- 50% of the 'marriage value' i.e. the amount that the value of the flat increases when the Lease is extended. Marriage value is not payable if the existing lease has more than 80 years unexpired.
The Leaseholder pays the Freeholder's legal costs, valuation costs and Stamp Duty.
How is the price agreed?
The Leaseholder's solicitor serves a notice on the Freeholder making a monetary offer. The Freeholder either accepts or serves a counter-notice giving his asking price.
The parties then negotiate a price, but, if they fail, either may apply to the Leasehold Valuation Tribunal to determine a price.
Calculating the price
We can assess the price for either party following inspection and perusal of documents including the Lease.
Negotiating the Price
We can negotiate the price for either party.
How much are valuations and negotiation fees?
Valuation fees and negotiation fees vary from case to case. We provide fee quotations if given basic details. Applications to the Leasehold Valuation Tribunal are charged at an hourly rate.
How do I obtain further information?
These notes provide general information. Please telephone us for detailed advice in specific cases.
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