Lease Extension and Enfranchisement Specialists

020 7499 8043 | info@richardjohnclarke.com

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 flat owners the right to extend their lease by an additional 90 years whilst reducing the ground rent to a peppercorn (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 to 80 years or below).

 

Marriage Value only applies to Leases of 80 years or less and is defined as the additional value brought about by “marrying” two interests together, the freehold and the short lease. In Lease Extensions, the Landlord retains the Freehold, but effectively this is usually only of nominal value after the lease is extended. To calculate this sum, it is necessary to carry out a “Before and After Valuation”. The additional value is “marriage value” and the Landlord is entitled to 50%.

 

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 can vary significantly but are generally within the region of £2000 - £3000plus VAT, but each case can be different.

 

The guiding principal in these matters is that costs have to be reasonable.

To help calculate the cost of your lease extension we have prepared two tables, shown below, which provide a range that a typical lease extension is likely to cost. However, this is subject, but not limited to, the following:

 

  1. Assumed Nominal Ground Rent of £50 doubling every 33 years. A higher ground rent and more frequent reviews will increase premiums
  2. This guide should only be used to arrive at a 'Ballpark' figure, we recommend a full inspected valuation should be carried out prior to purchase or serving Notice on the Freeholder/Head Lessee
  3. This guide assumes there is no short lease evidence available. However, you should note that the purchase price of this short lease property and others may increase the premium significantly

 

For properties within Prime Central London (this is generally defined as Notting Hill, Bayswater, Marylebone, Holland Park, Mayfair, Kensington, Knightsbridge, Westminster, Earls Court, South Kensington, Belgravia, Chelsea and Pimlico) please see the table below.

 

 

For a PDF version, please click here

For all other properties outside Prime Central London, please see the table below:

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020 7499 8043

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