What is a leasehold extension?

A leasehold extension is the process of extending the lease term of a property held on a leasehold basis. It helps maintain the property's value and desirability. Leasehold extension legislation allows leaseholders to extend their lease, ensuring the property remains attractive for sale or mortgage purposes.

How long is a leasehold extension ?

The length of a leasehold extension can vary depending on the jurisdiction and specific circumstances. In some countries, such as the United Kingdom, leasehold extensions are typically granted for an additional 90 years beyond the remaining term of the existing lease. However, it's important to note that leasehold extension regulations can differ, and it's advisable to consult local laws or seek professional advice like leasehold valuations for accurate information regarding leasehold extensions in a specific jurisdiction.

What are the benefits of lease extension ?

Extending the leasehold of a property offers benefits such as increased property value, improved marketability, easier access to mortgage financing, peace of mind and security, the avoidance of escalating costs, and more control over property management.

What happens to leasehold property after 99 years ?

After 99 years, the leasehold property typically reverts back to the freeholder, unless the lease is extended by the leaseholder. The ownership of the property, along with the land it is built on, returns to the freeholder once the lease expires. As a lease approaches its expiration, the property’s value may decrease, making it more challenging to sell or mortgage. It is advisable for leaseholders to consider extending their lease well before it reaches the 99-year mark to maintain the property’s value and their ownership rights.

Why choose leasehold Valuations for Lease extension or Buying Freehold ?

1. Fair Price: A leasehold valuation ensures you pay a fair price for a lease extension or freehold purchase.2. Increased Property Value: Extending the lease or buying the freehold can potentially increase your property’s value.3. Cost Savings: Accurate valuation helps minimise future costs like ground rent.4. Stronger Negotiation: A valuation report strengthens your position during negotiations with landlords.5. Legal Compliance: Valuations ensure you meet legal requirements for lease extensions or freehold purchases.6. Future Planning: Valuations help you plan for selling or passing on the property to future generations.7. Expert Advice: Engaging a valuer provides access to their expertise and guidance.8. Mortgage Support: Valuation reports improve your mortgage opportunities for lease extensions or freehold purchases.

How much does it cost to renew a leasehold ?

The cost of renewing a leasehold in the UK can vary depending on various factors, such as the property value, the length of the renewal term, and any negotiations between the leaseholder and the freeholder. Unlike extending a lease, which typically involves paying a premium to the freeholder, renewing a lease generally involves paying a nominal fee known as a “peppercorn rent” or a small percentage of the property value.The exact cost of renewing a leasehold will depend on the specific terms agreed upon between the parties involved. It is advisable to consult with a solicitor or a licenced conveyancer who specialises in leasehold matters to get an accurate estimate of the costs involved based on your particular situation.

Q. How much does it cost to extend a leasehold in uk ?

The cost of extending a leasehold in the UK can range from a few thousand pounds to tens of thousands of pounds, depending on factors such as the remaining lease length, property value, and negotiated terms with the freeholder. Additional costs include legal fees, valuation fees, and disbursements such as Land Registry fees. It’s recommended to seek professional advice for an accurate estimate based on your specific situation.

Calculate-marriage-value-in-lease-extension

Calculating Marriage Value: Understanding the Numbers Behind Lease Extensions

August 4, 2023

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If you’re a leasehold property owner considering a lease extension, you might have come across the term “Marriage Value.” This critical factor can significantly impact the cost of extending your lease and is essential to understand before entering into negotiations. In this blog, we’ll delve into the details of calculating Marriage Value, equipping you with the knowledge to make informed decisions about your property’s future.

What is Marriage Value?

Marriage Value refers to the increase in a property’s value that arises when its lease is extended. It represents the difference between the property’s worth with the current short lease and its higher value once the lease is extended. The concept stems from the notion that combining the leasehold interest (short lease) with the freehold interest (extended lease) creates additional value in the property.

Understanding the Calculation: A Simple Formula

Calculating Marriage Value involves a straightforward formula: Marriage Value = (Property Value with Extended Lease) – (Property Value with Current Lease)

In this equation, the “Property Value with Extended Lease” refers to the hypothetical market value of the property if the lease were extended to, for instance, 999 years. The “Property Value with Current Lease” is the property’s current market value with the remaining lease term.

Example Calculation

Let’s illustrate the calculation with an example:
Suppose you own a leasehold property in Slough with a current market value of £400,000 and 70 years remaining on the lease. You are considering extending the lease to 999 years.

Property Value with Current Lease: £400,000

Property Value with Extended Lease: The surveyor estimates that with a 999-year lease, the property’s value would be £550,000.

Using the formula: Marriage Value = £550,000 – £400,000 = £150,000 In this scenario, the Marriage Value is £150,000.

Factors Influencing Marriage Value

Several factors influence the Marriage Value calculation, making each case unique:

Lease Term Remaining: Generally, the shorter the remaining lease term, the higher the Marriage Value.

Property Value: The market value of the property significantly impacts the Marriage Value. Properties with higher values tend to have higher Marriage Values.

Ground Rent: The ground rent payable to the freeholder during the remaining lease term can affect the Marriage Value.

Capitalization Rate: This rate reflects the yield a freeholder might expect from the ground rent income. A higher capitalization rate leads to a higher Marriage Value.

Professional Valuation: The Key to Accuracy

Calculating Marriage Value is not a DIY endeavour. It requires a qualified surveyor or valuer experienced in leasehold property to determine the most accurate figures. Engaging a professional is crucial, as an incorrect calculation could lead to costly mistakes during negotiations.

Minimizing Marriage Value Impact

While the Marriage Value calculation is subject to various factors, homeowners can take certain steps to minimize its impact:

Start Early: Consider extending your lease while there is still a considerable lease term remaining, as this can reduce the Marriage Value.

Negotiate Wisely: Work with a skilled Leasehold surveyor who can negotiate the best possible terms on your behalf, considering both the lease extension premium and Marriage Value.

Conclusion
Understanding Marriage values is paramount when embarking on a lease extension journey. By grasping the calculation process and the factors influencing it, you can make well-informed decisions that align with your financial goals. Seeking professional advice and support is critical to ensuring a smooth and successful lease extension, making the most of your leasehold property investment.