Lease Extension Valuation
Lease Extension Valuation by Expert Chartered Surveyors Firm
Recognizing the pivotal role of lease extension is crucial for property owners. As a lease edges towards 80 years mark, the property’s value starts to diminish, impacting its market appeal and complicating potential sales. Mortgages become challenging for leases under 80 years, adding another layer of complexity to property transactions. A timely lease extension not only preserves your property’s value but also ensures sustained market attractiveness. By adding 90 years to the lease term and reducing ground rent to a nominal sum, property owners secure both financial longevity and locked value in their property.
Do I Need a Lease Extension Surveyor?
Embarking on a lease extension without the guidance of a specialist chartered surveyor is not advisable. A skilled surveyor will prepare a comprehensive lease extension valuation, presenting you with a detailed report that outlines the premium liability associated with extending your lease. This valuation report is essential as it provides the necessary financial insights, enabling you to assess the feasibility of proceeding with a lease extension before initiating the legal process.
Opting for free online lease extension calculators instead of a professional valuation report can have detrimental consequences. These calculators are notoriously inaccurate, and serving a Section 42 notice with an unreasonable and incorrect premium may lead to its invalidation. This, in turn, would prevent you from serving another notice for 12 months, resulting in a financial loss due to a higher lease extension premium when a new notice is eventually served in the future.
Erikas Grig Chartered Surveyors, a highly experienced firm in lease extension matters, boasts a long track record of successfully settling numerous cases through negotiation. We have refined our expertise by handling hundreds of lease extension cases, and we have successfully assisted a diverse range of parties in London and South East. Our clients include buyers, funds, property management companies, charities, homeowners, and landlords.
The advice we provide to our clients is invaluable, as our success in minimising the premium payable for the lease extension ensures significant cost savings. With extensive experience in handling highly complex lease extensions, we are well-equipped to represent your interests in the First-Tier Tribunal.
Frequently Asked Questions
Explore our comprehensive FAQ sections, crafted to provide clear and detailed answers to common inquiries we get about lease extension valuation and our company.
What is a statutory lease extension process?
1. Check if you are eligible to extend the lease. You must be a legal owner for a minimum period of 2 years and the original lease term must be granted for at least 21 years.
2. Employ the services of a chartered surveyor to conduct a thorough lease extension valuation. This will equip you with knowledge and insights about potential premium liability for a lease extension.
3. Instruct a specialist solicitor to prepare a Section 42 notice and serve it to our Freeholder.
4. Within a two-month period of Section 42 service, the freeholder responds with a Section 45 counter-notice, either accepting or proposing different terms for the lease extension.
5. If the freeholder suggests alternative terms, a negotiation phase ensues which lasts 6 months. Your surveyor will play a pivotal role in negotiating the most favourable terms during this stage.
6. In cases where an agreement cannot be reached within six months from the counter-notice, an application can be made to the First-tier Tribunal (Property Chamber). The Tribunal then determines the terms of the lease extension.
7. Once terms are agreed upon or determined by the Tribunal, the new lease is drafted, agreed upon, and formally completed.
8. The final step involves registering the new lease with the Land Registry for official documentation.
How is a lease extension premium valued?
The lease extension premium is calculated by using a statutory formula prescribed in Schedule 13 of the Leasehold Reform, Housing and Urban Development Act 1993. Valuation is an imprecise science, based as it is on the application of methodical calculation to a combination of known and assumed information.
Under Schedule 13, the following items are used to calculate the premium payable for the lease extension:
- Ground rent income and any future increases (the term)
- Long leasehold present value of the property (the reversion)
- Existing lease term to determine if marriage value is applicable (lease must be under 80 years)
- Marriage value
All these items are then combined accordingly to calculate the premium payable for the lease extension. Overall, the statutory formula interpretation and adaptation is a complex matter and experienced chartered surveyors will be able to calculate accurate premium payable for lease extension.
How to proceed with absent freeholder?
Initiating the statutory lease extension process begins with the service of a Section 42 Notice to the freeholder. However, complications arise when the freeholder’s whereabouts are unknown, and attempts to acquire their details from the property’s title register at the HM Land Registry have proven unsuccessful. A vesting order from the county court can be obtained granting a lease extension in the absence of the freeholder. If this is the case, it is possible to obtain a more favourable premium.
Before applying for a vesting order, you need to prove that reasonable effort has been made to locate the freeholder such as employing a search agent, posting adverts in the local gazette and checking probate records. Additionally, a premium payable for lease extension needs to be determined by the First-Tier Tribunal.
Is solicitor needed to extend the lease?
In most cases, you will need to instruct a qualified solicitor to assist with the lease extension process. The solicitor will assist in serving notices required to extend the lease, draft the lease and register a new lease with HM Land Registry. If you require a reputable solicitor to assist you contact us and we will put you in touch with our trusted solicitors specialising in lease extension matters.
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Embarking on the journey of lease extension can be a complex and daunting process. We are committed to ensuring that your lease extension is a seamless experience, characterized by premium valuation accuracy and prudent legal advice.
Erikas Grig MRICS
Director, Erikas Grig Chartered Surveyors
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