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What Is The 'Marriage Value' In Lease Extension Law?

By Tim Bishop

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Published: 30Jan2012
Word count: 494
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If you have only just started to research the ins-and-outs of the law surrounding lease extension, you have very likely come across the term 'marriage value'.

The purpose of this article is to provide you with a succinct explanation of this additional premium and to explain whether or not you will be eligible to pay it to your landlord when you extend a lease.

First and foremost, it is necessary to understand exactly what the marriage value actually is. This really is not too complicated. Basically, the marriage value payable to a landlord as part of the price of an extended lease, is the best estimate of the increase in the value of the property when the lease extension has been granted. In other words, it assesses the potential value of the property over the term of the new lease.

The resulting marriage value figure is then split straight down the middle between the leaseholder and landlord. Therefore, the 50% premium that would be eligible for the landlord will have to be paid in addition to other compensation costs in order to extend a lease.

However, the marriage value will only have to be paid to the landlord if the remaining term left on the lease has dropped below the 80 years mark. It is quite clear that the relevant legislation has been conceived here in an attempt to reimburse a landlord when they may be more out-of-pocket to extend a lease in the first place.

A firm understanding of the local market is essential when it comes to determining the eventual marriage value of the property -that's why any question regarding lease extension valuation is best left to a surveyor who specialises in lease extensions. The final premium must be based on the best estimate of how the local market is likely to increase over the relevant years that will be added to the lease extension.

As the marriage value premium is not necessary if the remaining term left to run on the lease is more than 80 years, this means that it will cost considerably less to extend a lease within such a timeframe. Moreover, compensation payments to the landlord will be lower the longer the lease has to run, too, and this means that it is often a good idea to consider lease extension as early on as possible.

Provided you have owned your residential leasehold property for a period over two years, you are likely to be entitled to an extension of your lease. You don't even have to have lived in your property during that period - or indeed at all. The sooner you make your application for an extended lease, the better. Don't forget that you also need to seek the assistance of a solicitor who specialises in lease extensions, as the procedure involved in achieving an extended lease is quite complicated.

If you're looking to choose Solicitors to help you with an extended lease application, contact Bonallack and Bishop - specialist Solicitors with plenty of practical lease extension experience.

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