What is a Quarter Day and how does it affect my lease?
In British and Irish tradition, Quarter Days were the four dates in each year upon which (amongst other things) rents became due.
They fell on four religious festivals roughly three months apart, and close to the two solstices and equinoxes:
- Lady Day – 25th March
- Midsummer Day – 24th June
- Michaelmas – 29th September
- Christmas – 25th December
For this reason, a significant number of long residential leases begin and have their anniversaries on one of the four Quarter Days.
It’s well worth taking a look at your lease and working out two crucial pieces of information:
1. The anniversary date
2. At which point the lease length will drop below 80 years
If you allow your lease to drop below 80 years, marriage value will become payable when you come to extend your lease, significantly increasing the cost of the exercise. Marriage value is, simply put, the difference between the value of the property with its current lease, and the value of the property with an extended lease. 50% of this value must be paid to the freeholder when extending a lease with fewer than 80 years remaining.
Consider a flat worth £250,000, with a lease approaching 80 years remaining:
If the lease is extended on the day before the lease drops below 80 years remaining, the premium payable for the lease extension may be in the region of £5,000. If the leaseholder waits until the day after the lease drops below 80 years, the premium could triple to almost £15,000.
So, as you can see, it’s vitally important that you know when your lease will drop below 80 years, in order to save yourself a significant sum of money when you come to extend your lease.
For further information, please contact James at j.laughlin@watsons-property.co.uk.
To discuss extending your lease, please contact our Customer Services Team at 01603 751577 or email: survey@watsons-property.co.uk
