Extend Your Lease guide discussion

amandajc

The surveyor does not too seem too sure about this - she says somewhere between £5,000 and £6,500. Given this I have decided to ask her to offer the freeholders £6,250 and see how that goes down. Thanks to everyone who responded.

Fire_Fox

Again what did you pay your surveyor to value, the property or the lease extension/ premium? Why are they giving you such a vague figure? Or have both parties given you a breakdown of their calculation of the premium, if so how does their surveyors compare to yours and to the LEASE explanation?

propertyman

It appears to be vague but the premium and marriage value is often easy to state, but alterations to lease terms can also be factored in and especially with shorter leases, the valuation of the property and improvements are open to argument and judgement.

To show how "easy" it is to value have a read of this puppy

http://www.bailii.org/ew/cases/EWCA/Civ/2007/1042.html

NB there have been subsequent developments on deferment..

amandajc

We have so far paid the surveyor just short of £400 to value the flat. She and the freeholder's surveyor have agreed on a figure of £79,000. The freeholder's surveyor's fees currently stand at £950 which we know we will be liable for.

Our surveyor has been in discussion with the freeholder's surveyor as regards the calculations on the value of the lease extension, but I haven't seen a breakdown of the figures from either side. If the freeholder refuses to accept our offer, or close to it (which seems likely), then I will ask for the breakdown from our surveyor and try to see if I can make any sense of this before taking the decision on whether to go to the tribunal or not.

I am concerned that we pay a fair amount for the extension as I know that we are amongst the first lease holders in the complex (several dozen flats) who are going through the process and I don't want to set any kind of precedent. For this reason I am prepared to go to the tribunal even if the financial gain from doing so is not large.

Fire_Fox

amandajc wrote: »

We have so far paid the surveyor just short of £400 to value the flat. She and the freeholder's surveyor have agreed on a figure of £79,000. The freeholder's surveyor's fees currently stand at £950 which we know we will be liable for.

Our surveyor has been in discussion with the freeholder's surveyor as regards the calculations on the value of the lease extension, but I haven't seen a breakdown of the figures from either side. If the freeholder refuses to accept our offer, or close to it (which seems likely), then I will ask for the breakdown from our surveyor and try to see if I can make any sense of this before taking the decision on whether to go to the tribunal or not.

I am concerned that we pay a fair amount for the extension as I know that we are amongst the first lease holders in the complex (several dozen flats) who are going through the process and I don't want to set any kind of precedent. For this reason I am prepared to go to the tribunal even if the financial gain from doing so is not large.

You keep repeating yourself instead of addressing the key issues. Why have you only paid your surveyor to put a market value on the flat and not properly value the lease extension/ premium? Pay for the proper valuations and ask to see the breakdown from each side - this will be needed for the LVT anyway. It's nonsensical to be seriously contemplating taking further legal action relying heavily on rough estimates from online calculators.

IMO you are completely misunderstanding the process and trying to leapfrog steps. The precedent and process are set out in the legislation, every leaseholder has the right to a fair price after two years. What a previous leasehold is willing to pay for a lease extension is only relevant if the next leaseholder chooses to roll over and accept it instead of seeking an accurate valuation using the standard calculations, an unfair price cannot be enforced. Please read the LEASE articles and follow the process methodically.

propertyman

I am a bit surprised that the detailed calculation is not already in the valuation, but do ask for it.

You might ask

" The online calculators indicate £5k/£6K (?) on the basis of £x rent for Y years and a value of £Z.

I would like to understand the reason(s) for the difference between that and our valuation, on which we are negotiating, before deciding to go to the LVT or not.

I understand they are fairly simplistic and indicative, but perhaps it is a question of something simple like the ground rent changing in the future, the no of years left or the value, that varies between the two.

I look forward to hearing from you with your comments and advice."

amandajc

With respect Fire Fox, I am not trying to leapfrog steps or seeking to rely purely on online calculators. I have engaged a surveyor to calculate a fair price for my lease extension and I'm sorry if this wasn't clear from my previous posts.

My error seems to be that I haven't asked her for her calculations, or the freeholder's surveyor's calculations and she hasn't offered them but has just given me a very vague figure along with the freeholder's offer - which isn't within her range - and no real advice on whether I should accept or not.

I will now make sure that I press her on these things as a priority as suggested by yourself and propertyman.

You are quite right to say that it is every individual's responsibility to ensure that they get a fair price - the problem is that we do not all have the time, or the wits, to work out what this is. That is why we pay professionals and/or resort to online calculators and experts on forums to give us some ideas of a ball park figure. My surveyor has already quoted me a figure that has been offered to someone else in the complex as if this would help me decide what to pay - what has been paid by others may well influence what those who follow are prepared to pay.

Once again (at the risk of repeating myself yet again :-)) many thanks for your advice.

Fire_Fox

amandajc wrote: »

With respect Fire Fox, I am not trying to leapfrog steps or seeking to rely purely on online calculators. I have engaged a surveyor to calculate a fair price for my lease extension and I'm sorry if this wasn't clear from my previous posts.

My error seems to be that I haven't asked her for her calculations, or the freeholder's surveyor's calculations and she hasn't offered them but has just given me a very vague figure along with the freeholder's offer - which isn't within her range - and no real advice on whether I should accept or not.

I will now make sure that I press her on these things as a priority as suggested by yourself and propertyman.

You are quite right to say that it is every individual's responsibility to ensure that they get a fair price - the problem is that we do not all have the time, or the wits, to work out what this is. That is why we pay professionals and/or resort to online calculators and experts on forums to give us some ideas of a ball park figure. My surveyor has already quoted me a figure that has been offered to someone else in the complex as if this would help me decide what to pay - what has been paid by others may well influence what those who follow are prepared to pay.

Once again (at the risk of repeating myself yet again :-)) many thanks for your advice.

Still confused why you have such a broad range when you have paid for a price for the extension (not simply the flat as you stated in your last post?). I wonder if there has been a communication breakdown here and you have not paid for for what you thoughts you had paid for.

I'm not having a pop at you by saying it is the individuals responsibility, just saying think of yourself not the next leaseholder to apply for a lease extension. You are only setting a precedent if other leaseholders take the lazy route of not employing their own professionals and trusting the freeholder rather than following the legislation. Precedent does not influence the lease extension premium as it does the market value when you are buying a whole property.

propertyman

Fire_Fox wrote: »

Still confused why you have such a broad range when you have paid for a price for the extension (not simply the flat as you stated in your last post?).

You are only setting a precedent if other leaseholders take the lazy route of not employing their own professionals and trusting the freeholder rather than following the legislation. Precedent does not influence the lease extension premium as it does the market value when you are buying a whole property.

Ok if you read post above

It appears to be vague but the premium and marriage value is often easy to state, but alterations to lease terms can also be factored in and especially with shorter leases, the valuation of the property and improvements are open to argument and judgement.

To show how "easy" it is to value have a read of this puppy

http://www.bailii.org/ew/cases/EWCA/Civ/2007/1042.html

NB there have been subsequent developments on deferment..

That shows that there are cases where valuation is not straightforward and in the listed cases took the court of Appeal to resolve.



Other extensions are not precedents, they are comparables. Whether they are then of relevance is another matter.

propertyman

In your case the lowest figure I can get assuming your figures unaltered is £6320.

However the variables will be
a; the yield on the rent based on comparable disposals
b; whether and when and by how much the rent increases
c: whether £79,000 is the unimproved value and if sold with 72 years
d; 50% of the marriage value which represents the ( unimproved) value of the property after the lease extension

Now it only takes an increase to £50 and £75 on the 33rd and 66th year( typical) a 1/2 % point and a change in the values and you start working up to £9k.

And let's not get into arguing if Sportelli and deferment rates are applicable Yes they are but arguments to overturn that are bubbling about.

So that's how you get variations. Why in your particular case will depend on what your valuer has established. And that takes up to 5 years of studying and up to 2 years of APC before you are qualified to do these.