A common question from owners of leasehold flats relates to the process involved in extending a lease - especially where the lease has fewer than eighty years remaining.
Many assume the first step is to approach the freeholder to enquire how much they will be requires to pay to extend the lease.
Lease extension practitioners however advise an alternative course of action and recommend that a surveyor specialising in this type of work is instructed to provide a professional valuation. This valuation will give an upper and lower estimate of the likely premium payable to the freeholder.
Many leaseholders assume that the freeholder will simply state what they want and they either pay up or accept don't extend. The assume that obtaining a surveyor's opinion is a waste of money.
However, a valuation, costing between £100 and £200 can save you thousands in the long run. The freeholder is likely to quote the highest figure he can get away with - usually based on greed rather than a formal calculation based on market value.
Freeholders are often investors who are out to maximise profits and are often, unsurprisingly, ruthless.
The following are the key reasons for seeking a professional valuation before approaching your freeholder:
- The amount payable for a lease extension has to be calculated in accordance with the provisions of the Leasehold Reform, Housing and Urban Development Act 1993 (as amended. ) These provisions are complex, but the surveyor will thoroughly familiar with them.
- The surveyor will also be aware of figures for lease extensions on similar properties in your neighbourhood, as well as similar cases which have been decided by the Leasehold Valuation Tribunal (LVT).
- Valuation is not an exact science, and every property is slightly different. So the surveyor will not only give you a figure which he considers is reasonable from your point of view, but also a figure which the freeholder might argue for. This will give you a realistic idea of the possible cost involved so you can consider how to finance the extension if you decide to proceed.
- When serving a S42 notice for a statutory lease extension it is essential to insert the figure which the leaseholder is willing to pay. If the figure inserted is unrealistically low, the validity of the notice could be challenged by the freeholder.
- If the freeholder does ask for a figure which is way higher than your surveyor’s figures, the surveyor will be available to negotiate with the freeholder’s surveyor.
- In the few cases where it is impossible to negotiate an acceptable figure and an application has to be made to the LVT, the surveyor will be available to give evidence on his valuation.
All these factors add up to a substantial case for getting a professional valuation.
Fridaysmove carry out hundreds of lease extension premium valuations every month.
Our surveyors and solicitors specialise in and are largely successful in negotiating substantially reduced premiums for our leaseholder clients.