The marriage value in terms of a lease extension with regard to a flat is a term that is often shrouded in mystery, but in fact it is very straightforward. In legal terms the marriage value is assumed to be the potential for the actual increase in the value of the flat in question that will arise from the granting of a new lease. The law needs for this profit or rise in value to be shared between the leaseholder and the landlord.
The law is quite fair by stating that when it comes to a leasehold extension there is a need to split the profit on a 50:50 basis so that both the leaseholder and the landlord will benefit from the lease extension.
Unfortunately the calculation of the marriage value can be slightly subjective when it comes to a UK lease extension. It can rely on specific local knowledge that can accurately and fairly assess the rate of increase that will arise from extending your leasehold.
Lease Extension Marriage Value – the 80 year trap
It is important to note that when the lease exceeds 80 years, ie there are still 80 unexpired years remaining on the lease, then the marriage value of the lease extension will be zero. Thus it is very much in the landlord’s interest to extend your lease whilst there is less than 80 years to run on the lease. As a result, it’s not unusual for unscrupulous landlords to drag their feet, in the hope that they can delay any leasehold extension until there are less than 80 years left on the lease. On the other hand the leaseholder will benefit from making sure that there are more than 80 years to run on the lease before she or he negotiates an extended lease.
How is my Lease Extension Marriage Value calculated?
When it comes to extending a lease, the marriage value in detail is actually the specific difference between two different and ‘aggregate’ or combined amounts. These are the value of the interest that the leaseholder has under the present lease, plus the value that the landlord has before the new lease is granted and the value of any interests that are intermediary. So this is one sum, then the difference between the leaseholders’ interests when he or she has a new lease with the value of the landlord’s specific interest with the new lease has to be taken into account.
Factors that need to be taken into account will be the local housing market, the average cost of flats with long (or short leases) the maintenance agreements etc. This is very important because it is local knowledge that will help to shape exactly how the marriage value is calculated on the lease extension. The whole field of extending leases is complex but there are many benefits and with expert help from specialist lease extension surveyors and solicitors, a reasonable marriage value can be calculated without too much bother!
Contact our Lease Extension Solicitors
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