Marriage Value Explained: The Hidden Cost in Lease Extensions

Marriage value is the most misunderstood and most expensive element of a lease extension premium for short leases. Learn exactly what it is, how it is calculated, and when the 2024 Act will abolish it.

What Is Marriage Value?

Marriage value is the increase in the combined worth of the leasehold and freehold interests that results from merging them through a lease extension. The extra value created is split 50/50 between the parties. It is payable only when the unexpired lease is below 80 years.

Marriage value is the reason an extension costing £8,000 with 81 years remaining might cost £22,000 with 79 years remaining — for the exact same property and the exact same transaction.

The Formula

MV = 0.5 x (Value of extended leasehold minus Current leasehold value minus Freeholder's reversion minus GR capitalisation)

A Worked Example

Property freehold value: £400,000 | Unexpired lease: 72 years | Ground rent: £200/yr

• Relativity at 72 years: approximately 95% giving current leasehold value of £380,000
• Relativity after extension (162 years): approximately 99% giving new leasehold value of £396,000
• Reversion: approximately £2,600 | GR capitalisation: approximately £3,870
• MV = 0.5 x (£396,000 minus £380,000 minus £2,600 minus £3,870) = 0.5 x £9,530 = £4,765
• Total premium: £2,600 + £3,870 + £4,765 = £11,235

Will the 2024 Act Abolish It?

Yes, in principle. The Leasehold and Freehold Reform Act 2024 proposes to abolish marriage value, which would be transformative for leaseholders with short leases. However, this provision requires secondary legislation and is not yet in force. There is no confirmed implementation date.

Disputes Over Marriage Value

Marriage value calculations are a major battleground between surveyors. The key dispute is usually the relativity percentage applied to the current short lease. Freeholders argue for lower relativity, meaning more marriage value. Having a specialist surveyor with access to current Tribunal comparables is essential to achieving a fair result.