Leasehold Property
A class of ownership which entitles the leaseholder to use and enjoy a property in accordance with the terms of a lease for a defined period of time. Leasehold property is typically held on a lease of between 99 and 999 years.
Long Lease
A lease granted for a term of more than 21 years.
Marriage Value
An element of the calculation of the price payable for a lease extension or enfranchisement where a lease has less than 80 years unexpired.
This is calculated as the difference between the total value of the leasehold and freehold interests before and after the lease extension (or enfranchisement), and is shared 50/50 between the leaseholder and the freeholder.
Generally, the shorter a lease is, the greater the marriage value will be.
No Act World
The legislation underpinning enfranchisement valuation dictates that valuations are to be undertaken on the assumption that the relevant Acts do not exist and, as such, the leaseholder has no right to extend their lease or purchase the freehold of their house/block.
This is particularly relevant when assessing relativity, as modern sale prices of properties with short leases will reflect the fact that the lease can be extended or the freehold purchased.
Adjustments are therefore made to such values (based upon professional research and/or legal precedent) to reflect the likely value of such a property if no such rights existed.
Notice of Claim (Initial Notice)
The notice served by the leaseholder(s) on the landlord, confirming that they are seeking to exercise their right to either extend their lease or purchase the freehold.
Onerous Ground Rent
A ground rent that will have an adverse effect upon either the capital value of the property, or the ability of a leaseholder to raise a mortgage on the property.
The precise point at which a ground rent becomes onerous is a matter of some debate, but it is typically taken to be an annual rent in excess of 0.1% of the capital value of the property, or with the potential to increase frequently or rapidly.
Peppercorn Rent
A legal term referring to a rent of minimal value – typically encountered following a statutory lease extension.
The rent is defined as ‘one peppercorn per annum’ and, given its negligible value is rarely (if ever) collected.
Qualifying Tenant
A tenant is a qualifying tenant if they are the tenant of a flat under a long lease (subject to other qualifying criteria).
In relation to collective enfranchisement, a qualifying tenant is a leaseholder of a flat under a long lease who does not own more than two flats in the building.
Reversion
The right of the landlord to receive possession of the property at the end of the lease. As valuers are not expected to predict the future, the value of a reversion will be based upon the value of the property at the valuation date.
Relativity
The relationship between the value of a property held on a short lease (typically below 80 years) and the value of the same property if it was held with either an extended lease or as a freehold property. i.e. A short leasehold property with a value of £80,000, against a value of £100,000 with an extended lease, would be said to have a relativity of 80%.
Relativity rates are derived from sales of comparable properties or, where no such evidence exists, professionally produced graphs of relativity.
Right of First Refusal
The obligation (in certain circumstances) upon a freeholder to offer the freehold of a property to their tenants, before they are allowed to otherwise dispose of the freehold interest in the property.
Right to Manage
The right of leaseholders within a block to take control of the management of the building.
This is done through a Right to Manage company, in which each participating leaseholder is a member/shareholder.
The amount payable by each leaseholder towards the maintenance and repair of the common parts of a block of flats or an estate.
Unexpired Term
The period, expressed in years, between the date of valuation and the end of the lease.
Zuckerman
Another well-used element of enfranchisement case law, which illustrates the threshold which must be met to justify a departure from the guidance set out in Sportelli.
