A Brief Guide To Lease Extension Valuation

As there are many legislative steps you need to take when you are looking to extend a lease, acquiring an accurate valuation for such a lease extension can prove to be a very complicated affair.

As such valuations will be based on as close an estimate of current market values as possible, it is highly likely that the leaseholder's and landlord's eventual figures will prove to be completely different from each other.

The sort of factors that will need to be taken into account, when you look to extend a lease, include:

The Diminution i.e. the reduction] in the Landlord's interest in the property if you extend a lease by a further 90 years

Where the remaining term to run on the lease is less than 80 years, a further premium, known as the 'Marriage Value'[which is payable to the freeholder], will need to be calculated into the overall cost of lease extension

You will also need to calculate a compensation payment for the loss that will arise when the new lease is granted.

This is where things can get very complicated indeed. Even the most experienced legal professional in this field may not always get their calculations bang on the money here, and this is when negotiations between the leaseholder and landlord may well arise. This is why it is always a good idea to instruct both a specialist lease extension solicitor and surveyor a good understanding of local market values. Some firms of solicitors deal extensively with such matters all around the country, and even though they may not be based within your home town, they should be sufficiently experienced in assisting you when you look to extend a lease -and should be able take your instructions online, by e-mail, telephone and possibly even Skype. The question of how much experience they actually have with lease extensions, is the first questions you should ask any solicitor or surveyor when you are attempting to find the right professionals to help you with your lease extension.

So, the main gist of the three bullet-points above are an attempt to calculate what interest and other losses the landlord will incur if they agree to extend a lease to you. This will be based on the number of years remaining to run on the current lease, as well as the peppercorn rent that is paid annually to the landlord.

Where the valuations from the leaseholder and landlord differ substantially, once the offer has been made to the landlord, they are able to reject it and submit what is known as a 'counter-notice'. This is where negotiations will really commence between the two parties and if they are not able to come to an agreement themselves, they may well make an application to the Leasehold Valuation Tribunal. The job of this body is not to specifically find in any party's favour; more to work out the most applicable valuation with all relevant legislative obligations taken into account.

Bonallack & Bishop are a firm of solicitors experienced in helping you extend a lease. They can offer you detailed advice on lease extension. Tim Bishop Senior Partner, sees himself as a businessman who owns a law firm.

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Extending Your Knowledge of Lease Extension Law

If you currently live in a leasehold property, you will appreciate the fact that you have a lease that is due to run for a predetermined number of years.

For example, many leases are granted for 99 years initially (though 125 years is also becoming common). However, unless you bought the original lease [and unless a lease extension has already been granted], the period left to run on the lease when you buy will inevitably be lower than this. In either event, once you start to gain an understanding of the way in which lease extension law works, you are likely to realise how imperative it is for you to consider a lease extension as soon as possible.

First and foremost, you need to have owned your current property for a period of more than two years before you can even begin to extend a lease. If you have owned your flat for a short period, it is still an excellent idea to gain a thorough knowledge of applicable lease extension law, so that you are ready to move as soon as you reach that crucial two year anniversary of ownership.

Next we need to discuss the length of time that you have left to run on the lease of your property. Hopefully we are looking at a period of time that is over 80 years. If the lease has a period remaining that is below 80 years, you will need to bear in mind that it will be more expensive to extend a lease. This is because in addition to usual legal fees required to extend a lease, another premium will become payable to the landlord and this is known as 'the marriage value'.

You will also need to be aware of the fact that the fewer the number of years left to run on a lease, the more problems you can have when you look to sell your property. Crucially, with a shorter lease, many banks will have their reservations when it comes to offering a mortgage on such a property. Fact recently, a number of lenders have tightened their criteria for lending on leasehold property - in general requiring increasingly longer leases before they will consider agreeing to a mortgage.

It is virtually impossible to provide an exact price for the cost of your lease extension. There are so many parameters to take into consideration here: e.g. the cost of the property; the ground rent (also known as the 'peppercorn rent'); and the date in which your occupancy commenced. This is where it becomes essential to ensure that you instruct an experienced and specialist lease extension solicitor in order to guide you through the minefield surrounding extending your lease. Rarely if ever, does the average property solicitor come across leasehold extensions - so it's essential that you pick a specialist who we knows the field.

If you need help in getting a Lease Extension then speak to Bonallack & Bishop. If you want specialist advice from a Lease Extension Solicitor contact them today. Senior Partner Tim Bishop is responsible for all major strategic decisions.

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The Complications Surrounding Your Lease Extension

If you are looking to extend a lease, you really ought to be aware of the fact that there is a lot of legislation associated with the procedure.

Even the most basic issue of determining whether or not a property is eligible for lease extension has limitations applied: e.g. with crown properties or National Trust properties. Therefore, it really is vitally important for you to instruct a specialist lease extension solicitor; one who can help you negotiate your way through the potential minefield involved in extending your lease.

When applying for a lease extension, there are set procedures that need to be followed in order; then there are very strict timescales in which notices etc. require responses. Once the official Tenant's Notice is served on the landlord (which is what actually gets the ball rolling in this regard), you need to be aware that a landlord can then serve a 'Counter-Notice': again there are timescales and procedures set out under The Leasehold Reform Act 1993 for this.

As far as the Tenant's Notice is concerned, this must be set out in a prescribed manner and this is defined in s.42(3) of the 1993 Act. If there is any of the relevant information missing on this notice, this will definitely hold-up the lease extension process and inevitably prove to be more costly for you in the end.

Even if the main procedure goes swimmingly, when you extend a lease, there remains the issue of the 'terms' of the new lease to be granted. Unless you are extremely knowledgeable in this area of law, you cannot hope to know whether or not the new lease complies exactly with the legislation that is in place. This is where instructing a specialist lease extension solicitor becomes vitally important, again.

The main valuation of leasehold extensions is another area that is best handled by an experienced professional. The question of valuation will not be not handled by the solicitor that you have instructed -you will need to appoint a specialist lease extension valuer who will need to have a good knowledge the principle the leasehold extensions, along with understanding local market conditions and prices in order to come up with the most accurate cost for sending your lease.

Lease extension can prove to be a very stressful transaction to go through. There is no way you could really handle this on your own: after all, what would you do if you received a counter-notice from your landlord, and how would you even know where to start where the actually valuation is concerned?

Instructing professionals to assist you in this process is best done from the very outset! Any attempt to save a few pounds along the way, when you look to extend a lease, will prove a false economy.

Wondering what a Lease Extension can do for you? Contact a specialist Lease Extension Solicitor at Bonallack & Bishop today.

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