Lease Extensions & Enfranchisement
Our expert team provide valuations under the Leasehold Reform Act 1967 or Leasehold Reform, Housing and Urban Development Act 1993.
Lease Extensions & Enfranchisement
Specialist valuation and negotiation advice for leaseholders and freeholders across the South West.
Lease valuation expertise
Lease extensions and enfranchisement are specialist areas of valuation requiring a detailed understanding of the relevant legislation, the property market and the terms of the existing lease.
Our experienced RICS Registered Valuers act for leaseholders and freeholders in connection with:
- Statutory lease extensions of flats;
- Negotiated lease extensions;
- Collective enfranchisement of blocks of flats;
- Enfranchisement of leasehold houses;
- Acquisition of freehold and intermediate leasehold interests;
- Valuation of the premium payable;
- Negotiation with the other party’s surveyor; and
- Expert evidence for the First-tier Tribunal (Property Chamber).
We work closely with our clients and their solicitors throughout the process, from the initial valuation and strategic advice through to negotiation and agreement of the premium.
Why does the remaining lease term matter?
A lease is granted for a fixed period and its value can reduce as the remaining term becomes shorter.
A shortening lease may affect:
- The property’s Market Value;
- Its attractiveness to potential purchasers;
- The availability of mortgage finance;
- The premium required to extend the lease; and
- The ability to sell or refinance the property.
The premium will not necessarily increase at a consistent rate as the lease becomes shorter. Under the valuation rules currently in force, marriage value may become payable where a lease has 80 years or fewer remaining.
Obtaining advice at an early stage can help a leaseholder understand the likely premium and costs before deciding how to proceed.
Leasehold Reform FAQs
Statutory lease extensions for flats
Qualifying owners of flats have a statutory right to extend their lease under the Leasehold Reform, Housing and Urban Development Act 1993.
Under the legislation currently in force, a statutory lease extension adds 90 years to the existing unexpired term and reduces the ground rent to a peppercorn, which has no financial value.
The leaseholder must pay a premium to compensate the landlord for the effect of granting the extended lease. The amount is calculated in accordance with the statutory valuation framework.
The previous requirement for a leaseholder to have owned the flat for at least two years before making a statutory claim has been removed. Other qualification requirements and exemptions continue to apply, and these should be confirmed by a solicitor experienced in leasehold reform.
We provide the valuation advice required to support the statutory notice and negotiate the premium following receipt of the landlord’s counter-notice.
Negotiated lease extensions
A leaseholder and freeholder may agree to extend a lease outside the statutory process.
A negotiated extension can provide greater flexibility, but the proposed terms may differ significantly from those available under the statutory procedure. The offer may include:
- A different length of extension;
- The retention or variation of ground rent;
- New ground-rent review provisions;
- Changes to other lease terms; or
- A different approach to costs.
An initially lower premium may not represent the best overall outcome if the extended lease retains an ongoing or escalating ground rent.
We can assess the premium and financial implications of the proposed terms, compare them with the likely statutory outcome and negotiate the valuation matters on the client’s behalf. A solicitor should advise on the legal terms and implications of the proposed lease.
How is a lease extension premium calculated?
Under the valuation framework currently in force, the premium for a statutory lease extension may include:
- The value of the ground rent the landlord will no longer receive;
- The present value of the landlord’s right to recover possession at the end of the existing lease;
- Marriage value where the lease has 80 years or fewer remaining; and
- Compensation for any other loss suffered by the landlord, where applicable.
The calculation may be influenced by:
- The length of the unexpired lease;
- The existing ground rent and review provisions;
- The value of the flat with its existing lease;
- The value of the flat with an extended lease;
- Capitalisation and deferment rates;
- The terms of the lease;
- The condition and characteristics of the property; and
- Relevant market and tribunal evidence.
Online calculators may provide a broad indication, but they cannot properly reflect all the characteristics of the property, lease and local market. A valuation should be undertaken before a statutory notice is served or an offer is accepted.
Our lease extension service
Our work will generally include:
- Reviewing the lease and information provided;
- Inspecting the property;
- Researching relevant market and tribunal evidence;
- Assessing the value of the existing and extended leasehold interests;
- Calculating the likely premium;
- Advising on an appropriate valuation range and notice figure;
- Reviewing the landlord’s or leaseholder’s valuation;
- Negotiating with the other party’s surveyor; and
- Providing expert evidence if the premium cannot be agreed.
Collective enfranchisement
Collective enfranchisement is the process through which qualifying leaseholders act together to acquire the freehold of their building.
The valuation can involve several interests, including:
- The freehold interest;
- Ground rents;
- Reversionary interests in the flats;
- Intermediate leasehold interests;
- Commercial or other non-participating areas;
- Development value;
- Marriage value, where applicable; and
- Other compensation payable under the legislation.
We act for groups of participating leaseholders and for freeholders, providing an initial assessment of the premium and negotiating the valuation aspects of the claim.
Enfranchisement of leasehold houses
The Leasehold Reform Act 1967 gives qualifying leaseholders of houses the right to acquire the freehold interest.
The applicable valuation basis will depend on the property, the terms of the lease and the relevant statutory qualification criteria. The premium may be assessed under section 9(1), section 9(1A) or section 9(1C) of the Act.
These valuation bases can produce materially different outcomes. A solicitor should advise which statutory basis applies before the valuation is undertaken.
We inspect the property, undertake the necessary valuation and negotiate the premium with the freeholder’s or leaseholder’s surveyor.
Acting for leaseholders
We help leaseholders understand the likely premium before they begin the formal process or respond to an offer from their freeholder.
Our advice can include:
- An initial assessment of the likely premium;
- A recommended figure for inclusion within the statutory notice;
- A reasoned valuation range;
- Review of the landlord’s counter-proposal;
- Advice on a negotiated lease extension;
- Negotiation of the premium; and
- Expert evidence if the matter proceeds to the First-tier Tribunal.
Our objective is to provide clear advice on the valuation position and achieve an appropriate settlement within the applicable statutory timetable
Acting for freeholders
We also act for freeholders who receive requests or statutory notices relating to lease extensions and enfranchisement.
Our advice can include:
- Assessing the premium receivable;
- Reviewing the figure proposed by the leaseholder;
- Advising on the valuation response;
- Valuing ground rent and reversionary interests;
- Considering marriage value and other compensation;
- Negotiating with the leaseholder’s surveyor; and
- Preparing expert evidence where agreement cannot be reached.
Early advice allows the freeholder and their solicitor to respond within the relevant time limits and ensures the valuation is supported by appropriate evidence.
What happens if the premium cannot be agreed?
Most claims are resolved through negotiation between the parties’ surveyors.
Where agreement cannot be reached, either party may need to apply to the First-tier Tribunal (Property Chamber) for determination of the premium and any other matters within its jurisdiction.
Strict statutory deadlines apply. The parties should obtain legal advice to ensure that an application is made in time and the claim remains protected.
Our RICS Registered Valuers can assist with negotiations, prepare expert evidence and act in connection with tribunal proceedings where required.
The Leasehold and Freehold Reform Act 2024
The Leasehold and Freehold Reform Act 2024 contains significant reforms to lease extensions and enfranchisement.
The removal of the two-year ownership requirement has been brought into force. However, a number of the principal valuation reforms have not yet commenced.
Once fully implemented, the reforms are intended to introduce:
- Standard lease extensions of 990 years;
- A new statutory valuation method;
- The removal of marriage value;
- A cap on the treatment of ground rent within the valuation calculation;
- Prescribed capitalisation and deferment rates; and
- Changes to responsibility for the parties’ professional costs.
Until the relevant provisions are brought into force, statutory premiums continue to be assessed under the existing valuation framework.
As the legislation is being implemented in stages, leaseholders and freeholders should obtain current valuation and legal advice before deciding how to proceed.
Lease Extensions & Enfranchisement Case Studies
Related Services
Leasehold Reform FAQs
What Rights are Available?
Leasehold Reform legislation provides three principal different rights:
- If you own a lease of your house, the right to buy the freehold or extend the lease by 50 years, paying a Modern Ground Rent
- If you own a lease of your flat, the individual right to extend your lease by 90 years at a nil ground rent
- If you own a lease of your flat and can co-operate with other leaseholders in your building, the collective right to buy the freehold of your building.
How Do You Value a Freehold Interest Under the 1967 Act?
The 1967 Act provides two method for valuing houses, generally referred to by the relevant section of the Act as follows:
- Section 9 (1) – The ‘Original Valuation Basis’, being the value of the site.
- Section 9 (1A), 9 (1C) – The ‘Special Valuation Basis’, being the value of the house, including a share of the marriage value.
Under both basis, the valuation of the premium is made up of several calculations, which are subject to deferment and capitalisation rates. It is advisable to obtain a valuation for a qualified surveyor, who specialises in this area.
Can You Choose Which Valuation Basis Under the 1967 Act?
Which valuation basis applies, will depend on the qualification criteria. If the lease meets the original low rent test and the house meets the value limits, the original valuation basis will apply. In all other cases, including cases where the original lease has been extended under section 14, the special valuation basis will apply. We recommend seeking advice from a qualified and appropriately experienced legal professional, as which valuation applies, can significantly impact the premium.
How Do I Calculate the Premium Payable to Extend My Lease?
The valuation of the premium is made up of several calculations, which are subject to deferment and capitalisation rates. It is advisable to obtain a valuation for a qualified surveyor, who specialises in this area.
Should I Wait to Extend My Lease?
The Leasehold and Freehold Reform Bill 23/24 was announced in the Kings Speech in 2023 and introduced to the House of Commons the following November. The bill aims to make it cheaper and easier for leaseholders of houses and flats to extend their leases and buy the freehold. While it is anticipated the Bill will gain Royal Assent before a General Election, there is no guarantee. If you have between 80 and 82 years left on your lease, we recommend seeking advice. When your lease term falls below 80 years, your lease extension will likely become more expensive because of marriage value.
How Much Will It Cost to Extend My Lease?
Firstly, you will have to pay the premium for the lease extension. Secondly, you will have to pay your landlord’s reasonable costs, which are limited to their legal and valuation fees. You will also have to pay your own legal and valuation fees; if the case proceeds to Tribunal, there may be addition costs for representing you.
What is a statutory lease extension?
A statutory lease extension is a new lease granted under the rights provided by leasehold reform legislation.
Under the rules currently in force for flats, the new lease adds 90 years to the remaining term and reduces the ground rent to a peppercorn. The leaseholder pays a premium calculated under the statutory valuation framework.
Do I still need to own my property for two years?
No. The previous two-year ownership requirement for statutory lease extensions and the enfranchisement of leasehold houses has been removed.
Other qualification requirements and exemptions may apply, so eligibility should be confirmed by a specialist solicitor.
What is marriage value?
Marriage value is the additional value created by combining the landlord’s and leaseholder’s interests through a lease extension or freehold acquisition.
Under the valuation rules currently in force, the landlord is generally entitled to 50% of the marriage value where the lease has 80 years or fewer remaining. Marriage value does not apply to a statutory lease extension where the lease has more than 80 years remaining.
Should I extend my lease before it reaches 80 years?
The premium may increase once the remaining term reaches 80 years because marriage value can become payable under the current valuation framework.
The decision will depend on the property, lease, personal circumstances and progress of legislative reform. Leaseholders approaching the 80-year point should obtain current valuation and legal advice promptly.
Can I agree a lease extension directly with my freeholder?
Yes. A leaseholder and freeholder can agree a negotiated lease extension without using the statutory process.
Before accepting an offer, the leaseholder should obtain valuation and legal advice on the premium, length of the new lease, proposed ground rent and any changes to the lease terms.
How long does a lease extension take?
The timescale depends on the complexity of the property, the responsiveness of the parties and whether the premium can be agreed through negotiation.
Statutory notices contain strict deadlines. Your solicitor will monitor these and advise on the procedural timetable.
What does the valuer do?
The valuer assesses the likely premium, advises on the figure to include within the statutory notice, considers the other party’s valuation and negotiates the valuation matters.
Can you act for either party?
Yes. We act for leaseholders, freeholders and groups of leaseholders pursuing collective enfranchisement.
We undertake a conflict-of-interest check before accepting an instruction.
What is collective enfranchisement?
Collective enfranchisement allows qualifying leaseholders within a building to act together to acquire its freehold through a statutory process.
The eligibility requirements and procedure are complex. We provide the valuation and negotiation advice, working alongside the participating leaseholders’ solicitor.
What happens if we cannot agree the premium?
If the premium cannot be agreed within the statutory timetable, an application may be made to the First-tier Tribunal (Property Chamber) for determination.
Most cases settle through negotiation, but we can prepare expert evidence and assist with tribunal proceedings where required.
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