Lease Extension Advice

starsky27

Hi all,
I'm just starting the process of extending my lease.
My details are as follows,
Flat value-160,000
Current lease -72.3 years

I have approached the landlord on a informal basis and have just received their offer. To extend the lease by 90 years on a peppercorn rent they have quoted the figure of 7,900. The survey which was carried out on my property on behalf of the landlord( which I paid for) states that they believe the extension of the lease could be offered in the region of 5,400-7,900. They recommend that the landlord requests 7,900 which obviously is the maximum amount.
Am I within my right to negotiate the cost being somewhere nearer the lower figure ?. If I decided to do this would I now be best to negotiate informally or through a solicitor ? .

Any advice would be appreciated.

Thanks.

SleeplessinScandinavia

There is quite a good guide on mse about extending a lease:

http://www.moneysavingexpert.com/mortgages/extend-your-lease#howmuch

There is reference to a Leasehold Valuation Tribunal, which may arbitrate over the valuation. I'd guess your solicitor is your best bet to negotiate, if you've not done this kind of thing before.

On the other hand, you've still got to pay him/her to do it, and may well also be asked to pay some costs incurred by the landlord.



Good luck

starsky27

Thanks for the advice and link.
I'm kicking myself for not getting it extended earlier.
With the paperwork I was sent from the landlord( a housing association ) there is a acceptance letter . This letter has an option stating why you don't want to accept this offer. In my opinion a fair amount would be somewhere in the middle of those figures quoted by the surveyor. As the surveyor was instructed by the housing association to carry out the survey( they use the same company in all surveys) its obvious that they will recommend the max amount as they are acting on their behalf.
I'm thinking I might stay on the informal route using this letter as my first stab at negotiation but I'm not sure exactly how to word my reply.

Any advice ?

tim123456789

starsky27 wrote: »

Hi all,
I'm just starting the process of extending my lease.
My details are as follows,
Flat value-160,000
Current lease -72.3 years

I have approached the landlord on a informal basis and have just received their offer. To extend the lease by 90 years on a peppercorn rent they have quoted the figure of 7,900. The survey which was carried out on my property on behalf of the landlord( which I paid for) states that they believe the extension of the lease could be offered in the region of 5,400-7,900. They recommend that the landlord requests 7,900 which obviously is the maximum amount.
Am I within my right to negotiate the cost being somewhere nearer the lower figure ?. .

Yes

The statutory process specifically allows for you to make a counter offer without prejudicing the offer that you have already received

starsky27

Thanks for the info Tim123456.

Leaseman_2

It's usually worth negotiating. Most freeholders will compromise and often settle for less than their initial offer. If the freeholder won't budge then you could consider making a formal application by serving a Section 42 Notice (If you have owned the flat for at least 2 years you are probably eligible). You should get the Section 42 Notice served by a solicitor and you should obtain proper valuation advice.

katiecohen

It is always worth a try to seek to negotiate with the freeholder but if you have owned for 2 years and don't make any progress, serve a section 42 notice as CapitalLeasehold says. I am a Leasehold Enfranchisement Partner at Child & Child if you need any help.

starsky27

Thanks for your replies.
An update,I contacted the freeholder contesting the original valuation. They replied by sending me a letter giving me a direct telephone number for the surveyor and asking me to talk to him. I did this today and they explained that it wasn't an exact science and this was reflected in the financial parameters in valuation. He then dropped the valuation amount to somewhere near the middle of the estimates and told me he will put this offer to the freeholder. Now it's a waiting game to see if they accept this amount.
If not I will be going down the formal route via my solicitor.

Thanks

propertyman

You can of course reduce the premium further by agreeing an extension to say the modern standard length 125 years ( 72 + 53) and if you are not going to live there for more than a few years paying a modern ground rent of £100 to £400 a year.

You might then pay say £3/4k and £250/300 per year.

starsky27

Thanks of that info Propertyman.
It's certainly food for thought especially given the fact we will be selling in the near future.

Thanks

Leaseman_2

Don't tell the freeholder that starsky27! It would give them stronger bargaining power.