How Accurate is Our Lease Extension Calculator?

Monday, 25th October 2021
Leasehold Valuations

This is a question that is asked from time to time, so it made sense to reveal a little detail on that subject. Peter Barry’s Leasehold Calculator launched in 2017 and allows the user to input some basic information which returns an estimated premium range for a statutory 90 year lease extension.

The short answer is that it is very useful in its purpose to provide an estimate or an indication of the premium payable and by that measure is very accurate. This accuracy however relies on the user entering realistic and correct data.

The Market Value input relies on the user having a reasonable idea as to what their flat, on a long lease, is worth. They may be aware of sales of similar properties in the block or road, but a useful tool is Rightmove House Prices, where a history of sales are listed:

The number of years remaining is simple to find after a review of the lease as is the ground rent that is currently being paid.

How Accurate is it?

On the basis that the user inputs a long lease value that is within £20,000 of what it should be, I would estimate that 90% of the ranges that are produced are accurate when compared to the reported figure.

Behind the webpage is the same calculator that is used by your Valuer when they work on your report. The resulting range takes the singular figure produced by that calculator and gives the user a range.

One of the key inputs, the relativity percentage, has changed a number of times since 2017 as case law alters the most commonly adopted position. Unfortunately for leaseholders, the swing has been in favour of their freeholders who have fought for some big wins in the Upper Tribunal and Court of Appeal.

What it does not consider

  • Ground rent reviews
  • Impact of short lease sales evidence (can significantly affect relativity and the resulting premium)
  • Intermediate leases

Rates we use

For those of you who are more technically minded we adopt the following inputs:

  • Deferment: 5%
  • Capitalisation: 7%
  • Relativity: Savills Unenfranchiseable as per Zuconni case (Upper Tribunal)

Why have a report?

First of all, an estimate is only an estimate, most useful to determine roughly whether you have the finance to proceed with your lease extension in the first place.

Second, the strength of your negotiation position will depend on the evidence behind it and you do not get that with a few minutes on our estimate calculator. Your freeholder will put forward an initial offer that is typically 20%-40% higher than what you should reasonably pay.

If it is reasonable to pay £35,000-£40,000, you can bet that you will be offered £45,000-£50,000. You will need your Valuer’s report to counter such figures.

You and your Valuer will need to present sales evidence to justify the long lease value of the flat and case law to support all the key inputs that affect the reversion, capitalisation and relativity rates. Finally, you will need to know what figure to either open your negotiations at or serve formal S42 notice. Your report will contain these justifications and recommendations.

Nasty Ground Rents

You can only enter 1 ground rent figure for the estimate calculator. It does not take into account rising rents, or those linked to RPI or the flat’s value.

We have undertaken numerous valuations for clients with aggressive ground rents, with many having received offers for revised rent schedules from their freeholder. It is only with an expert report that they can confirm what is reasonable and make an informed decision.

If you are interested in extending your lease, please have a go on our calculator to see what you might pay and then their phone or email us for a free quote. Many of our clients chose our desktop option, for value for money and speed but we do of course undertake inspections when it is warranted.

I had a really positive experience with Shaun Blake at Peter Barry. The survey was very thorough and Shaun was on hand to answer several follow-up questions I hand. I would recommend them to anyone.
Requested a level 2 survey with Peter Barry and was very happy with the service, the survey goes above and beyond what I have experienced before and gave a very thorough breakdown of the risks and what next steps both I and the solicitor should take. I highly recommend going with them!
Response from the owner:Thank you for sharing your experience working with Peter Barry Surveyors.
I’m using them to help with lease extension and provide valuation, survey and advise on same. Still in the process, but they have very quick, efficient, professional and also helpful to date.
Lease extension is a tricky process so having them deal with this efficiently and provide clarity has been so welcome.
Response from the owner:We are pleased to hear how useful you have found our service.
Peter Barry offers an efficient and effective service. Helpful advice on various levels of homebuyers reports. It was so helpful to be able to talk things through with David Breeze. Recommended.
Response from the owner:Thank you for your recommendation Mr Greenwood.
Administrator Joanne was super quick to get me into their system and assigned Surveyor, David Breeze. David is delightful, wonderful, knowledgable, even helpful after surveying the property to assist me with outstanding tasks to make sure I was comfortable and understood the reports.
Response from the owner:We are pleased to hear that you were so satisfied with the service you received from David.
Excellent customer service.
Jaynell was extremely helpful and David Breeze provided us with a very comprehensive and detailed report.
We welcomed the opportunity to speak with him before and after the survey. He answered all our questions and addressed our concerns by recommending possible solutions. I have already recommended him and all at Peter Barry.
Thank you for a very positive customer experience.
Response from the owner:We appreciate your recommendation & positive feedback, thank you.
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