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.

Marriage Value vs. Marriage Tax: Debunking Confusion in Lease Extension Talks

August 18, 2023

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Lease extensions can be intricate affairs, especially when it comes to the concepts of “Marriage Value” and “Marriage Tax.” These terms often lead to confusion and misconceptions among leasehold property owners. In this comprehensive blog, we will delve into the differences between Marriage Value and Marriage Tax, debunk common myths, and equip you with the knowledge to navigate lease extension talks confidently.

Understanding Marriage Value:

Marriage Value, as we discussed in a previous blog, refers to the increase in a property’s value that arises when its lease is extended. It represents the additional value created by combining the leasehold interest (short lease) with the freehold interest (extended lease).

Understanding Marriage Tax:

Marriage Tax is not a technical term related to lease extensions. Instead, it is a colloquial term used to describe the premium or additional cost that arises when the lease term drops below 80 years. The cost increases significantly once the lease falls below this threshold due to the introduction of Marriage Value calculations.

Debunking the Confusion:

Myth: Marriage Tax and Marriage Value are the same.
Reality: Marriage Tax is not a formal term in lease extension processes. It is used informally to describe the impact of Marriage Value when the lease term is less than 80 years.

Myth: Marriage Value only applies to certain properties.
Reality: Marriage Value is a standard consideration in lease extension negotiations for leasehold properties with less than 80 years remaining on their lease.

Myth: Marriage Value is a penalty imposed by freeholders.
Reality: Marriage Value is a legitimate factor in lease extension negotiations based on the property’s increased value after the extension.

Myth: Marriage Value calculations are fixed and non-negotiable.
Reality: While Marriage Value calculations are based on formulas, there is room for negotiation during the lease extension process.

Myth: The only way to reduce Marriage Value is to extend the lease early.
Reality: While extending the lease earlier can reduce the impact of Marriage Value, there are other strategies to explore during negotiations.

Navigating Lease Extension Talks:

During lease extension talks, it is essential to have a clear understanding of Marriage values and their implications. Here are some key points to consider:

Seek Professional Advice:
Engage the expertise of a qualified surveyor or valuer experienced in lease extensions and Marriage Value calculations. They will provide accurate valuations and guide you through the negotiation process.

Start Early:
Consider extending your lease before it drops below 80 years to minimize the impact of Marriage Value and the potential “Marriage Tax” effect.

Negotiate Wisely:
Collaborate with the freeholder to reach a fair agreement on the lease extension premium, considering both the lease term and ground rent.

Explore Alternative Options:
In some cases, it may be beneficial to negotiate separate terms for the lease extension premium and ground rent, finding a balance that suits both parties.

Also Read

The Dos and Don’ts of Negotiating Marriage Value in Lease Extensions

Calculating Marriage Value: Understanding the Numbers Behind Lease Extensions

Conclusion:

Understanding the differences between Marriage Value and Marriage Tax is crucial to navigating lease extension talks successfully. By debunking common myths and seeking professional advice, you can approach negotiations with confidence and secure a lease extension that aligns with your financial goals. Remember that each lease extension case is unique, and seeking tailored advice from experts will help you achieve the best possible outcome in your leasehold property investment.