Need Help Negotiating Lease Extension.

da_rule

Depending on when the freeholder issued his counter notice he could just be delaying matters as he knows that after 6 months you’ll lose the ability to go to the tribunal and therefore have to wait until you’ve owned the property for 2 years.

strawberries1

anselld wrote: »

I said "if your surveyor can support £12,000". "Working it back" to the number you first thought of will not be a convincing argument at Tribunal.

In his report he calculated using a relativity figure (93.25%) that resulted to £11938.

strawberries1

da_rule wrote: »

Depending on when the freeholder issued his counter notice he could just be delaying matters as he knows that after 6 months you’ll lose the ability to go to the tribunal and therefore have to wait until you’ve owned the property for 2 years.

Counter notice was issued early September. So it looks like I have till early March to make an application.

strawberries1

Yes it was advertised for £290000.
The other property completed a month before. I almost bought it but but the doubling GR put me off.
Perhaps I should make an application to the tribunal and that might make the freeholder reduce the premium?

Tom99 wrote: »

[FONT=Verdana, sans-serif]I presume you bought this property in the open market after it has been advertised for sale?[/FONT]
[FONT=Verdana, sans-serif]You, in competition with anyone else who might have been interested, paid £260,000.[/FONT]
[FONT=Verdana, sans-serif]Therefore you have an open market sale of the subject property on almost exactly the valuation date in the Section 42. Perfect valuation evidence in fact.[/FONT]
[FONT=Verdana, sans-serif]If your property was worth more than £260,000 why did the sellers sell it to you at £260,000, why did no-one else bid more?[/FONT]
[FONT=Verdana, sans-serif]The other sale is interesting but not nearly as relevant as the price you paid. They paid £289,000 at a slightly different date and not for your exact property. Maybe they overpaid. They were obviously in the market at the same time as you, so why did they not buy your property and save themselves £29,000. So you have a good case.[/FONT]
[FONT=Verdana, sans-serif]But lets assume the worst case, you property really was worth £289,000 and you got a bargain.[/FONT]
[FONT=Verdana, sans-serif]The lease extension calculator using £260,000 and £30pa GR is £11,654[/FONT]
[FONT=Verdana, sans-serif]But even if you use £289,000 it is still only £12,935.[/FONT]
[FONT=Verdana, sans-serif]I think you need a different surveyor he does not seem to be on your side.[/FONT]

Tom99

[FONT=Verdana, sans-serif]Presumably you used one of the online calculators to arrive at £12,000, maybe this one:[/FONT]

[FONT=Verdana, sans-serif]https://www.freeholdcalculator.com/leasehold_extension.php[/FONT]

[FONT=Verdana, sans-serif]Using the above calculator and current value £260,000, ground rent £30pa unexpired lease 73yrs gives a premium of £11,654[/FONT]

[FONT=Verdana, sans-serif]If you want to play around with the numbers you can replicate that online calculator in a spreadsheet. Here is an image of such a spreadsheet:[/FONT]

[FONT=Verdana, sans-serif]You can see the answer from the spreadsheet is £11,688 so a minor 0.3% difference in the rounding. [/FONT]

[FONT=Verdana, sans-serif]https://ibb.co/7RnqJYQ[/FONT]

[FONT=Verdana, sans-serif]Here is the spreadsheet if you want to take a look:[/FONT]

[FONT=Verdana, sans-serif]Excel Lease Extension Calculator[/FONT]

[FONT=Verdana, sans-serif]What calculation did you supply the freeholder with to support your £12,000 and has the freeholder given you any calculations to support either £18,000 or £16,000?[/FONT]

strawberries1

I had typed up a long reply but it disappeared!

Thanks so much for providing such detail and informative reply.
Freeholder hasn't shared his calculations.

Surveyor provided 3 calculations in his report.
Freehold capitalisation Rate 6.5% Freehold Deferment Rate 5%
Term remaining 72.93yrs

£13,829 Relativity 92.47%

£11,938 Relativity 93.25% (Notice)

£18,824 5% Relativity 89% (counter notice)

Using the calculator and including the recently sold price as the value with freehold I get 90% relativity.

The site says "The value of your 72.93 year lease on the property is £260,000 and we believe this represents just 90% of the 'relative' value of owning the property with the lease extension, which is £289,000."

Doing some further research online, the freeholder's surveyor's relativity graph puts the Relativity at 92.47% which is £13,829.

Tom99 wrote: »

[FONT=Verdana, sans-serif]Presumably you used one of the online calculators to arrive at £12,000, maybe this one:[/FONT]

[FONT=Verdana, sans-serif]https://www.freeholdcalculator.com/leasehold_extension.php[/FONT]

[FONT=Verdana, sans-serif]Using the above calculator and current value £260,000, ground rent £30pa unexpired lease 73yrs gives a premium of £11,654[/FONT]

[FONT=Verdana, sans-serif]If you want to play around with the numbers you can replicate that online calculator in a spreadsheet. Here is an image of such a spreadsheet:[/FONT]

[FONT=Verdana, sans-serif]You can see the answer from the spreadsheet is £11,688 so a minor 0.3% difference in the rounding. [/FONT]

[FONT=Verdana, sans-serif]https://ibb.co/7RnqJYQ[/FONT]

[FONT=Verdana, sans-serif]Here is the spreadsheet if you want to take a look:[/FONT]

[FONT=Verdana, sans-serif]Excel Lease Extension Calculator[/FONT]

[FONT=Verdana, sans-serif]What calculation did you supply the freeholder with to support your £12,000 and has the freeholder given you any calculations to support either £18,000 or £16,000?[/FONT]

strawberries1

I note you say I need a different surveyor but I've already paid this one.

It looks like I have to put together in a letter my arguments to the freeholder. (I am doing that now.) Stating that his surveyor's relativity is the lowest percentage 92.47% for the term and yet it comes to £14,820 and using an average of 4 relativity graphs the relativity is 94.04% £12,406

Tom99 wrote: »

[FONT=Verdana, sans-serif]I presume you bought this property in the open market after it has been advertised for sale?[/FONT]
[FONT=Verdana, sans-serif]You, in competition with anyone else who might have been interested, paid £260,000.[/FONT]
[FONT=Verdana, sans-serif]Therefore you have an open market sale of the subject property on almost exactly the valuation date in the Section 42. Perfect valuation evidence in fact.[/FONT]
[FONT=Verdana, sans-serif]If your property was worth more than £260,000 why did the sellers sell it to you at £260,000, why did no-one else bid more?[/FONT]
[FONT=Verdana, sans-serif]The other sale is interesting but not nearly as relevant as the price you paid. They paid £289,000 at a slightly different date and not for your exact property. Maybe they overpaid. They were obviously in the market at the same time as you, so why did they not buy your property and save themselves £29,000. So you have a good case.[/FONT]
[FONT=Verdana, sans-serif]But lets assume the worst case, you property really was worth £289,000 and you got a bargain.[/FONT]
[FONT=Verdana, sans-serif]The lease extension calculator using £260,000 and £30pa GR is £11,654[/FONT]
[FONT=Verdana, sans-serif]But even if you use £289,000 it is still only £12,935.[/FONT]
[FONT=Verdana, sans-serif]I think you need a different surveyor he does not seem to be on your side.[/FONT]

Tom99

strawberries1 wrote: »

I note you say I need a different surveyor but I've already paid this one.

[FONT=Verdana, sans-serif]You are correct to not place too much reliance on the ravings of an anonymous forum bod like me, so yes of course you need to make up your own mind.[/FONT]

strawberries1

Dear Tom99, you have been very helpful and are obviously very knowledgeable. Ofcourse you're not giving professional advice but general advice which I am most grateful for. :beer:

Tom99 wrote: »

[FONT=Verdana, sans-serif]You are correct to not place too much reliance on the ravings of an anonymous forum bod like me, so yes of course you need to make up your own mind.[/FONT]

Tom99

strawberries1 wrote: »

Dear Tom99, you have been very helpful and are obviously very knowledgeable. Of course you're not giving professional advice but general advice which I am most grateful for. :beer:

It is also a bit to easy for me to spend your money! So yes, you are right to make up your own mind.