Let’s now look at the adjoining flat, 125, High Street which still has 83.83 years to run on it’s lease. The legislation says that the ‘marriage value’ is split equally between the freeholder and the lessee, so in the example above the freeholder is entitled to £5,022 under this heading. This is made up of three elements:-Īs we have discussed before the ‘marriage value’ is basically the difference between the aggregate values of the freeholder’s and lessee’s interests before and after the grant of the new lease. Years value of interests after grant of new leaseįrom the above example we can see that the total amount that will have to be paid by the lessee is £13,246. To share of freehold with vacant possession Value following purchase of extension sayĭiminution in Value of Freeholder’s Interest Let’s look at the calculation for 123, High Street first. In our previous blogs we have discussed how the freeholder has to be compensated for the loss of ground rent, the potential reversionary value of the flat at the end of the original lease and a share of the ‘marriage value’ if the existing lease has less than 80 years to run. This lease will expire on 24th December 2094 and at present has an unexpired term of 83.83 years.īoth flats have a ground rent which is set at £50 per year for the first 33 years of the lease and then rises to £100 per year for the next 33 years and £200 per year for the final 33 years of the lease.įor the purpose of this exercise we will assume that both flats will have a market value of £200,000 with a new long lease. The second property is 125, High Street it also has a 99 year lease, but this lease commenced on 25th December 1995. The lease will expire on 24th December 2079 and at present has an unexpired term of 68.83 years. It has a 99 year lease which commenced on 25th December 1980. They are both two-bedroom, purpose-built flats of identical design. Let’s assume that our two flats are situated next door to each other in High Street, Anytown. In order to demonstrate this we will look at two flats which are identical in every respect, except that one has a lease of more than 80 years and one has a lease of less than 80 years. We have talked quite a bit about the concept of ‘marriage value’ and how important it is to apply for a new lease while the existing lease still has more than 80 years to run. We’ve looked at the various elements that have to be taken into account in calculating the premium that the lessee will have to pay to the freeholder and thought that it was about time that we now looked at a worked example of a typical case. Over the course of the last few posts we have tried to explain the process of granting a new lease under the terms of the Leasehold Reform and Urban Development Act 1993.