Marriage Value

United Kingdom

Marriage value is applicable to leasehold properties. If the sum of leasehold and freehold interests is described as the total property value, then marriage value is the increase in the total property value following a lease extension^[1] or collective enfranchisement.^[2]

The 1993 leasehold reform act stipulates that in cases of lease extension or collective enfranchisement, the marriage value be split equally between freeholder and leaseholder since the uplift in value only arises from the landlord’s action to grant the new lease or sell the freehold. The legislation also stipulates that where the remaining lease length is greater than 80 years, the marriage value be nil.^[3]

Relativity rate

To aid in the decision of marriage value for a particular case, the ratio of leasehold value to unrestricted freehold value for the particular time to lease expiry is considered. This ratio is called the relativity rate and decreases from close to 100% to eventually 0% as the time to lease expiry decreases.^[4]

It should be noted that the relativity rate is considered in the theoretical “no Act” world (prior to The 1993 Leasehold Reform Act).^[5] In practice, previous Leasehold Valuation Tribunal decisions are often used as evidence in determining the applicable relativity rate in a particular lease extension or collective enfranchisement case.^[6]

References