purchase of freehold calculator

What does “purchase of freehold” mean?

Buying the freehold means purchasing the landlord’s interest so that your leasehold property gains long-term security and usually better marketability. In plain English, you are buying out key future rights currently held by the freeholder: future ground rent income and the right to take full value back when the lease expires.

In practice, the amount you pay (the premium) is influenced by valuation assumptions and legal rules. This page gives you a practical estimate so you can plan your budget before obtaining formal professional valuations.

How this calculator works

The model uses three common valuation building blocks used in enfranchisement discussions:

• Term value: the present value of future ground rent income the freeholder loses.
• Reversion value: the present value of the freeholder’s right to get the property back at lease end.
• Marriage value: usually applies when the lease is below 80 years, reflecting value created by merging interests.

Your estimated premium is calculated as:

Premium ≈ Term Value + Reversion Value + Marriage Value

Then this tool adds optional fees and a contingency percentage so you can see a more realistic budget range.

Input guide: what each number means

1) Property value

Use a realistic market value for the property on a strong tenure basis (often long lease/freehold equivalent). This figure has a major effect on reversion and marriage value.

2) Ground rent and years remaining

Higher ground rent and longer remaining term generally increase term value. The years remaining also control discounting and whether marriage value is triggered.

3) Capitalisation and deferment rates

These are discount rates used to convert future cash flows into present value. Even small changes in rates can materially shift the output, so this is one area where professional advice is especially valuable.

4) Relativity

Relativity expresses leasehold value as a percentage of the full value. As leases get shorter, relativity usually drops. A lower relativity (especially under 80 years) can increase marriage value and total premium.

Why the 80-year point matters

When a lease falls below 80 years, marriage value often becomes payable under standard assumptions in enfranchisement valuation. That is why many leaseholders start planning early, before crossing that threshold. This calculator automatically includes a marriage value estimate for leases under 80 years.

How to use this estimate in real life

• Run a base case with your best current numbers.
• Run a cautious case using slightly lower relativity and a higher contingency.
• Prepare a negotiation range, not just one target number.
• Add legal, valuation, and administration costs to your cash plan.

A practical approach is to treat the central premium as your expected outcome, then reserve extra budget for negotiation and professional fees.

Important limitations

This is a planning calculator, not a formal valuation report. Real enfranchisement valuations can include more detailed assumptions, lease clauses, local market evidence, rights and restrictions, and case law interpretation. If you are proceeding with a legal claim or formal notice process, use this as a starting point and speak to specialists.

Quick FAQ

Is this calculator only for flats?

It can be used for a broad estimate in many leasehold settings, including houses and flats, but legal routes differ. Always confirm your specific statutory path with a solicitor.

Can I rely on this result for tribunal evidence?

No. Tribunal or formal legal use generally requires professional valuation evidence from a qualified enfranchisement surveyor.

How accurate is the result?

It is useful for budgeting and early planning, especially if you test multiple scenarios. Accuracy depends heavily on your inputs and local valuation assumptions.