What is Marriage Value?

Full Definition

Marriage value is the additional value created when a leasehold flat with a short remaining lease is extended, or the freehold is bought, because a property with a long lease (or freehold) is worth more on the open market than the sum of a short lease plus the freeholder's interest in it separately. As a lease gets shorter -- particularly once it drops below about 80 years, and especially once it nears the point where mainstream mortgage lenders will not lend against it -- the flat becomes progressively harder to sell or mortgage, so its value falls faster than a simple straight-line reduction would suggest, while the freeholder's reversionary interest correspondingly becomes more valuable as the date they regain vacant possession draws closer. Under the leasehold enfranchisement rules that applied before the Leasehold and Freehold Reform Act 2024 reforms, where a lease had fewer than 80 years left, the leaseholder extending their lease or buying the freehold had to pay the freeholder 50% of this marriage value on top of the compensation for the freeholder's loss of ground rent income and reversion, on the basis that the "marriage" of the short lease and the freeholder's interest into one long-lease or freehold asset created a windfall gain that should be split between the two parties. No marriage value is payable at all where the unexpired lease term is 80 years or more, which is why leaseholders are routinely advised to extend well before the 80-year mark to avoid this often substantial additional cost. Worked example: a flat with a 70-year lease remaining might be worth £220,000, while the same flat with a long (999-year) lease would be worth £250,000 -- a £30,000 marriage value uplift created purely by removing the short-lease discount. Under the pre-2024-Act rules, the leaseholder extending the lease would typically need to pay the freeholder half of that uplift, £15,000, in addition to the separate valuation figures for lost ground rent and the freeholder's reversionary interest, making leases under 80 years significantly more expensive to extend than those just above the threshold.

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