Lease Extensions
Our firm specialises in valuing and negotiating lease extensions, both on statutory and informal bases.
An informal basis would be where no Section 42 Notice is served and an extension is agreed with a retained ground rent.
The statutory valuation is a form of compulsory purchase. A tenant is entitled to compel a landlord by service of a Section 42 Notice under the 1993 Leasehold Reform Act (as amended) to grant a lease extension. This entitlement is subject to a qualification period of having had registered ownership of the flat for two years.
The premium paid is dependent on the lease length and value. If a lease has more than 80 years unexpired, due to the Commonhold and Leasehold Reform Act 2002, marriage value is ignored.
Marriage value is the profit generated from a lease extension. There are generally substantial savings by making an application before the lease term reduces below 80 years. Marriage value is the difference between what everyone has before and after the lease extension. This increase in value is attributed to combining the freehold and leasehold interest. Under statute the landlord is entitled to 50% of this difference.
The Premium
The premium payable for a lease extension is effectively the amount paid to compensate the landlord extending a lease. There are generally three elements, but occasionally a fourth. The most common are: the loss of ground rent income; the loss of the reversion in the flat (possession at the end of a lease); and marriage value. The fourth less common element is “other compensation”, such as any future loss on enfranchisement or loss of development potential, such as within roof voids on top floor flats.
The statutory right allows the tenant to claim an additional 90 years to the lease, at the same time as buying out their ground rent. The new lease is subject to a peppercorn (effectively £nil) ground rent.
We are able to act throughout the UK, but have particular expertise in prime central London. We have acted against most of the major estates, such as Bedford, Cadogan, Cambridge, Church Commissioners, The Crown, Eton, Eyre, Grosvenor, Howard de Walden, John Lyon, Myron Wilson, Portman and Sloane Stanley Estates. We regularly provide expert advice in proceedings at the Leasehold Valuation Tribunal (LVT) and at Court.
We also act regularly in suburban South London, particularly in Croydon and Sutton. We also service the corridor between these areas and the South Coast, in places such as Brighton, Lewes and Hastings. In suburban areas we often act for tenants against Freshwater.
Contacts
Justin Bennett: jlb@lbb.org.uk or John Byers: jhb@lbb.org.uk
- Look at our published articles on Lease Extensions
- For more information and a Lease Extension Calculator visit www.lease-extension.com.
