Lease Extension - Tip for a Wise Tenant!
Extending your lease under The Leasehold Reform, Housing and Urban Development Act 1993 for an additional term of 90 years requires that a premium is to be paid to your Landlord.
This premium is calculated as a total of the diminution in value of the Landlord’s interest in the property plus a share of the ‘marriage value.’
The Marriage Value
The marriage value is the added value over and above the value of the existing freehold interest, which is created by amalgamating the freehold and leasehold interest.
An expert valuer will need to calculate the value of the freehold with vacant possession together with the current leasehold valuation to work out the marriage value. There are many different methods and models put forward by expert valuers as to the most accurate formula for this calculation however, the current trend favours calculations based on current market data rather than historical.
The significance of the 80 year term
The calculation and agreement of the marriage value can prove costly for the Tenant especially if the valuation is contested by your Landlord. Tenants need to be aware that the marriage value is only payable if the unexpired lease term is 80 years or less. So it is very important to check your lease and extend early to avoid this additional charge!
Our expert team of Property Solicitors have a wealth of experience in dealing with lease extensions for both Landlords and Tenants and can guide you through the complicated statutory process. Give us a call today so we can help you check the unexpired term of your lease and discuss your lease extension options.
Associate Solicitor Sutton Office