Lease Extension Valuation
You will need a lease extension valuation to extend your flat's lease. This is the first step in obtaining an extension on the remaining term of a lease.
A lease extension valuer will be able to give you an idea of how much premium you will pay to the freeholder or landlord. This is the price to compensate for the extra years on the lease.
When you own a leasehold property, you own the right to live in the property for a set time but you do not own the land it sits on. The land is owned by the freeholder who charges the ground rate. In theory, once the lease ends, the property would be returned to the freeholder.
Below we look at when you need a lease extension valuation and what it costs. We also look at how to find the best valuer or surveyor for you and your home.
A lease extension valuation gives the surveyor everything they need to negotiate the premium on your behalf. This valuation is not required for houses and is only used for flats or maisonettes.
Under the Leasehold Reform, Housing and Urban Development Act 1993, owners of leasehold flats are entitled to a 90-year lease extension at a fair market price.
You can get an idea of how much the lease extension could cost you by using our lease extension calculator.
What Does a Lease Extension Valuation Surveyor Do?
A specialist surveyor will undertake a complex set of calculations based on information they have on the property. They may visit the property and will research the local housing market. They will consider:
- The current market value of the property
- How much the property is worth with the lease extension
- The remaining lease term
- The ground rent (annually)
- Marriage value
- Any improvements made by the leaseholders and the extra value this may have added
The lease extension survey will prepare your valuer or surveyor for negotiations with the freeholder. This will determine the premium you will pay. The premium is the most expensive element of extending a lease. As a result, good negotiations are vital for you to get the best price.
The surveyor will then submit an opening offer to the freeholder for the premium. The freeholder can then respond with a counteroffer. You do not have to accept this initial counteroffer and have the right to negotiate a lower premium. Your surveyor will negotiate with the freeholder until a mutually satisfactory premium is agreed upon.
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When Do You Need a Lease Extension Valuation?
You should extend if there are less than 90 years left on the lease. However, you can only extend the lease if you have been registered as the owner of the property with the Land Registry for at least two years.
Keep in mind that if you have under 80 years left of your lease, the cost of the extension will be much more expensive. The lease is a depreciating asset and even under one day can cost you.
Once the lease falls below 80 years, you will need to pay 50% of the property’s “marriage value” in addition to the cost of extending the lease. Marriage value is the amount the property value increases as a result of the lease extension.
A long lease can increase the property’s value, making it easier to sell. Properties with shorter leases can be difficult to sell or remortgage. This is partly because it is difficult to get a mortgage on the property. Mortgage lenders are reluctant to provide a loan for a property with a short lease as its value may decline.
How Much Does It Cost?
The average lease extension valuation cost is £600 - £900. Additionally, negotiating costs average around £150 - £200 an hour. You must factor this into your overall cost for extending a lease. The cost of the valuation will depend on the size of the freehold property in question and its value.
Who Pays for the Valuation?
You will be required to pay for your own lease extension valuation. You will also have to pay for the freeholder’s professional costs which include a valuation and lease extension solicitors costs. The Leasehold Reform Act states that the leaseholder must pay the freeholder or landlord’s “reasonable” costs for the lease extension.
- Other costs when extending the lease length include:
- The lease extension premium
- Legal costs for a solicitor or conveyancer
- The freeholder’s solicitor costs
- Surveyors negotiation costs
- Land Registry Fees
Be aware that in some cases you may also be required to pay Stamp Duty if the premium is greater than £40,000
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How to Find a Lease Extension Surveyor
One of the best ways to find a lease extension surveyor is to use a trusted comparison website like Compare My Move. We can connect you with up to 6 expert surveyors in your local area who can provide a valuation for your lease extension.
All of our surveying partners are registered by the Royal Institution of Chartered Surveyors (RICS). This means that they are held to the highest standards. This way you can find the best valuation surveyor in your local area.
You must make sure the valuer you use can advise you correctly. They must specialise in enfranchisement and be up-to-date with case law. With this in mind, you can also find a list of valuers on the Association of Leasehold Enfranchisement Practitioners (ALEP) website.
