Property Owner
Lease extensions and enfranchisement matters
Is your lease getting short? Will it delay your sale when you move? How much will it cost you to extend?
We can help answer these and other questions you might have about extending your lease or buying your freehold. David Aspey BLE, MRICS has been carrying out lease extension valuations and dispensing general advice for over 20 years in the locality. While he has appeared before tribunals giving expert witness testimony, his day to day work deals with producing valuations and negotiating lease extensions on an informal basis, ‘outside of the Act’. He is an active member of ALEP (Association of Leasehold Enfranchisement Practitioners) and regularly attends meetings held by The Leasehold Forum. In 2008/9, he was President of the BHEAA (Brighton and Hove Estate Agents and Auctioneers Association).
In order to provide an accurate assessment of the premium for a lease extension an inspection is carried out in most cases. Following this a thorough analysis is undertaken of recent sales transactions using evidence from a wide range of sources including our own database to produce a long lease value which then becomes the main element of calculations which follow guidelines set in the 1993 Leasehold Reform Housing & Urban Development Act (as amended in 2002). It would be helpful and would speed up the valuation process if you could provide the following :
- A copy of the lease and any Deed of Variation.
- A list of improvements such as new kitchen/bathrooms/central heating or significant alterations which have occurred since the beginning of the lease as these need to be disregarded-you don’t want to pay for these twice!
- Your Freeholder’s name and his valuer for the avoidance of a conflict of interest.
The premium is an aggregate of the following 4 elements:
TERM
As the statutory lease extension extinguishes the existing ground rent, your Freeholder will seek compensation for this loss. The valuation capitalises the ground rents and finds their present value.
REVERSION
If the lease is extended, the Freeholder’s right to take back the property at the end of the current lease will be deferred. The future value of the property is assessed by using a deferment rate. This is a highly speculative exercise as no-one can predict the future but a thorough examination of the salient factors took place in the Cadogan v Sportelli and others case. The deferment rate used here is often used. Even though the reversion may be some time hence it might still amount to a significant sum.
MARRIAGE VALUE
(if lease has less than 80 years). This is the difference in price you would pay for a flat with a long lease and the price for an identical flat but with a lease less than 80 years. The Freeholder is entitled to 50% of this which is non-negotiable.
OTHER COMPENSATION
e.g. there may be development potential to which the Freeholder is entitled but whose benefit will be deferred by granting a lease extension. The ‘hope value’ of such a venture also needs to be assessed.
For Freehold valuations or Collective Enfranchisement cases much the same methodology is followed as per the 1993 Act. Our valuation provides a helpful breakdown enabling each individual leaseholder to know what they will be paying.
Clearly, the process of extending your lease begins with the valuation but what happens next? In most cases, the Freeholder will commission a valuation for which you will have pay and the process of negotiation starts. We offer a post-valuation negotiation service seeking a quick and mutually agreeable settlement.
If you require further information or advice please feel free to contact David and his team for a fee quote.
Remember, don’t delay; the shorter the lease, the more you pay.
The button above allows you to submit your quotation request online and we will email you your quote. You will be able to accept and proceed with the quote simply by following links in the email you receive. At all times, the team are available if you would prefer to speak to someone, by phone or email for any other enquiries
PLEASE GET IN TOUCH FOR MORE INFORMATION