Lease extension valuation

The methodology for calculating the premium to be paid to the freeholder in exchange for an extension to the lease under the Leasehold Reform Housing Development Act 1993 was, until fairly recently, a simple calculation.The valuation approach was based on averaging the established relativity graphs.This put valuing the premium on a stable platform and would mean flat owners were able to input details of their lease into a lease extension calculator widely available online and would be given a fairly accurate estimate of the likely premium payable to the landlord.

Following the case of Sloane Stanley v Mundy and Others, the Upper Tribunal no longer favours the established approach for assessing relativity for different lease lengths. The change in the Tribunal’s method has resulted in landlords being able to establish higher premiums.

Given the change in the established methodology, this is likely to result in the valuation process becoming more complex and protracted. It is therefore important that you obtain expert legal and valuation advice at an early stage.

For advice on lease extensions, please contact Hayley Grantham in our Property Disputes team.

Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.