The Marriage Value

The marriage value represents the increase in the value of the e.g. in a block of flats, following the completion of the enfranchisement; their additional market value arising from the ability of the enfranchising leaseholders to grant themselves longer leases. In that this potential "profit" only arises from the freeholder's obligation to sell, the legislation requires that it be shared equally between the parties.

The legislation stipulates that for any flat held by a participating member where the unexpired term of the lease exceeds 80 years any marriage value is to be ignored.
Taking the following  figures as an example:
The improved value of the property is £1,650,000 from this is subtracted:
is the leaseholders' present interest £1,500,000 and the freeholder's interest £15,027
In this case the marriage value is £134,973

Taking the 50:50 split between the freeholder and the enfranchising leaseholders, the leaseholders would have to pay half this figure - £67,486 - in addition to the freeholder's interest.

In the above example it can be seen that marriage value can considerably exceed the value of the freeholder's interest. Its calculation is dependent upon the estimated increase in value of the flats and, clearly, the lower that increase the lower will be the marriage value.
This is an area where the input of a valuer with local knowledge is of paramount importance to both parties in order to provide substantive comparable evidence of the local market and how, if at all, flat values will be affected.
The longer the current lease the lower the latent marriage value may be, until eventually it becomes negligible.