Lease Extension
If you own a leasehold property you will only own the property for the term of years that is specified within your lease. However, under the Commonhold and Leasehold Reform Act 2002 you do have the legal right to extend your lease.
This Act sets out the guidelines and requirements for a tenant (the current owner of the leasehold interest in the property) to extend their lease by paying the landlord (the owner of the freehold interest in the property) a sum of money, also known as the premium.
Under this Act any tenant that extends their lease will not only add a further 90 years to the term, but they will also have their ground rent converted to a peppercorn (zero).
Type of Factors that can affect the Valuation:
Length of Lease
The length of the lease will have a direct effect on its valuation, the longer the lease the higher the final valuation figure will be. As such, determining the exact lease length is key to establishing the total cost of the leasehold extension. Over the years our Surveyors have valued properties with leases ranging from 90 years to those less than 20 years.
Ground Rent
The ground rent is the rent that the tenant pays the landlord each year. With ground rents usually changing a set intervals, or being tied to the Retail Price Index of the property (RPI), having a full understanding of how these can affect the value is key to accurate valuation.
Marriage Value
This is the all important number when it comes to leasehold extension valuations. If the lease length is less than 80 years, the tenant instantaneously pays a higher premium to the landlord. The figure is also dictated by the long lease value of the property, therefore having a thorough understanding of this is key to valuing the property.