LEASE EXTENSION VALUATION: THE SURVEYOR’S ROLE

LEASEHOLD

Where valuation advice fits alongside legal advice during a statutory or negotiated lease extension.

Statutory versus informal lease extensions

Qualifying leaseholders have a statutory right to extend their lease on defined terms, but many extensions are instead agreed informally and directly with the freeholder. Either route requires a premium to be agreed, and that premium is a valuation question, not simply a matter of negotiation.

What goes into the premium

The calculation typically considers the value of the existing lease, the value of the extended lease, and — for shorter leases — marriage value and the appropriate deferment and capitalisation rates. Small differences in these inputs can produce materially different premiums, which is why the figure needs proper valuation input rather than a rule of thumb.

Where the surveyor's role sits

A solicitor manages the legal process and the statutory notices where applicable; a surveyor advises on what the premium should actually be, based on comparable evidence and recognised valuation methodology. Leaseholders are best served when both are involved from an early stage, rather than instructing valuation advice only once a figure is already in dispute.

Why early advice helps

Understanding the likely premium before entering negotiations gives a leaseholder a realistic expectation to negotiate towards, and reduces the risk of either overpaying or under-preparing for what the freeholder is likely to argue for.