Professional valuation

Leaseholders rights

Under the 1993 Act, as amended by the Commonhold and Leasehold Reform Act 2002, a leaseholder is entitled to apply to the freeholder of his or her building for a lease extension of 90 years on the existing lease at peppercorn ground rent, provided he fulfills the following criteria :-

• The leaseholder must have owned the flat for the last two years before applying for a lease extension. There is no residency requirement.
• The lease must have been granted for a fixed term initially for at least 21 years at a low rent.

This is not a fully comprehensive list of requirements for lease extensions but should cover most eventualities. If a leaseholder does not fulfill all of the above requirements, he or she may still wish to apply to the freeholder, but only outside the terms of the 1993 Act.

What does a lease extension cost?

The cost of buying a lease extension includes:

• Loss to the freeholder of ground rent income.
• Loss to the freeholder of reversion, i.e. entitlement to the flat at the end of the existing lease, as well as any other loss (if applicable).
• 50% of the marriage value. The marriage value is best defined as the increase in the value of the flat arising from the leasehold and freehold interests being combined. There is no marriage value payable on flats that have more than 80 years un-expired on the lease.
  

Those applying for an extension on an existing lease also have to pay the freeholder's valuation and solicitor's costs. They will also have to pay stamp duty.

What if the freeholder and leaseholder are unable to agree on a lease extension price?

To apply for a lease extension, a solicitor will need to serve a notice on the freeholder under S.42 of the 1993 Act making an offer.

The freeholder may accept the offer or respond in his counter notice with his own asking price, following which the leaseholder may wish to enter into negotiations to settle the premium to be paid. If this cannot be achieved then either the leaseholder or the freeholder may make an application to the Leasehold Valuation Tribunal, who will determine the appropriate price for the lease extension.

How we can help?

When it comes to negotiating a lease extension, we can provide advice on the price we believe should be fairly paid under the 1993 Act. Our calculations are based on our experience of acting on behalf of leaseholders and freeholders under the 1993 Act. Our experience in lease extensions also comes from cases that have been brought before the Leasehold Valuation Tribunal. These cases give the prices paid for lease extensions on flats of various values and lease lengths in different areas. These sources of information help build up a picture of leases and realistic extension prices, which we can apply to flats of all values and all lease lengths.

Our further role

Once you have received our report we would be very pleased to assist further with negotiations if required in an attempt to reach agreement.

Our fees

contact us for a competitive quote.

To contact us or register for the service

Register online if you would like to make use of our lease extension services. If you would like us to carry out an inspection of your flat, please email us at valdep@dng.co.uk

Terms & Conditions

For further information on our terms & conditions please
contact valdep@dng.co.uk or call 020 7591 8746