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:
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:
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: