© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
The Leasehold Reform Housing and Urban Development Act 1993 (“the 93 Act”) introduced not only the right of collective enfranchisement, but also of an individual lease extension in relation to individual flats. The right of a lessee to extend their lease was conceived by Parliament to be exercised by lessees where they were unable for some reason to collectively enfranchise. Having said that, it is possible to claim a lease extension, and then to join in a subsequent collective enfranchisement.
As originally enacted the Act contained a residence qualification. That condition was repealed by the Commonhold and Leasehold Reform Act 2002 (“the 2002 Act”) which substituted a two-year ownership qualifying period calculated from the date that the initial notice is served. Section 22 (1) of the Land Registration Act 1925,and case law has established the period of ownership begins to run from the date the lessee is registered as the proprietor of the flat at HM Land Registry.
Section 128 of the 2002 Act also provided that no marriage value is payable where the length of the unexpired term of the lease exceeds 80 years at the time the initial notice requiring the lease extension is served. This change has had a profound practical effect on dealing with the sale and purchase of leases, as by far the greatest valuation element is attributed to marriage value.
If a lessee is selling a flat and the unexpired residue of the term is nearing 80 years, then the buyer will be aware that at the point the unexpired residue of the lease falls to eighty years or less a much more substantial premium will be payable for a lease extension than would otherwise be the case. The buyer will be faced with waiting for the two-year qualification period to expire before being able to acquire a lease extension by which time the unexpired residue of the term will have fallen below 80 years.
This dilemma can be resolved by the seller, serving an initial notice, whilst the lease has more than 80 years to run, and then assigning the benefit of that notice, simultaneously with the assignment of the existing leases, to the buyer (section 43 (3) )of the 1993 Act. Because the date of the valuation for the purposes of the Act is the date when the initial notice is served, marriage value is not payable even though after the date of the assignment the unexpired residue of the term has fallen below 80 years.
Whilst the above is a useful procedure for both seller and buyer, care has to be taken to ensure the documentation is compliant with the legislation. If not, the buyer could end up in a position of having to wait for the two year ownership period to expire before another notice is served by which time marriage value could be payable.