Introduction to Lease Extension
Lease Extension is a fairly complex area including both legal and valuation expertise.
In order to deal with these two aspects, we have teamed up with specialist solicitors. Together our aim is to help our clients extend their Leases, at the lowest possible cost to them.
The Leasehold Reform Act 1993 gives apartment owners the right to extend their lease by an additional 90 years. In addition, the Act allows the ground rent to be reduced to zero.
However, the freeholders are entitled to compensation, which is known as the Premium. This is made up of the following:
1. Capitalisation of the Ground Rent.
2. Reversion: the value of the right to have the apartment back at the end of the lease which consequentially will be delayed by an extra 90 years.
3. Marriage Value (this only applies where the lease length falls below 80 years).
Marriage value is the additional value which is realised by merging the existing interests (short lease and freeholder) compared to the new long leasehold value.
In addition, the freeholder is also entitled to claim reasonable costs for their surveyor valuation and their solicitor fee for the relevant legal work. However, they are not entitled to claim for the costs of negotiations. These costs generally are within the region of £2000 - £3000, but each case can be different.
The guiding principal in these matters is that costs have to be reasonable.
Our surveyors are professionally qualified and have many years' experience in valuation matters.