Extortionate License to Alter Premium

jazzythumper

We previously extended our leasehold flat with a kitchen extension and separate summerhouse, we had the amount that this would increase the value of our flat valued by a chartered surveyor and paid a premium that was approximately 1/3 of the value for the license to alter to be granted.

We now would like to do a further small extension to the summerhouse and these works have been valued at increasing the value of our leasehold by £15k, our freeholder is trying to charge us nearly £15k for this licence, we feel this is unreasonable, based on the previous license costing 1/3 of the increase in value and feel a premium nearer £5k would be appropriate. We have explained this to them, but so far they are unwilling to budge.

The land that we wish to use for the extension is within out demise.

Are we stuck in a position where if they are unwilling to negotiate we will have to pay that figure, or can we take them to a tribunal in order to agree what we feel would be a more sensible fee?

Any help anyone is able to provide would be greatly appreciated.

Thanks

Jazzy

Comms69

Basically yes, this is one of the pitfalls of leasehold

jazzythumper

Would a First-tier Tribunal (Property Chamber) not be a useful thing to do in this instance?

eddddy

jazzythumper said:

Would a First-tier Tribunal (Property Chamber) not be a useful thing to do in this instance?

It depends what your lease says.

For example,

• If your lease allows you to extend the summerhouse with the freeholder's consent - you might have to pay the freeholder a reasonable fee for giving consent (which might be a few hundred pounds) - but no premium would be payable.

• If your lease doesn't allow you to extend the summerhouse - the freeholder can charge you any premium they like, for letting you do something that's not allowed in your lease. (And a tribunal won't override that.)

Assuming a premium is payable - it's really a case of who is better at negotiating, and who is more desperate. For example, one strategy is to say.... "I'll pay you £4k for consent.  So you can either accept £4k of free money, or I won't I do the extension and you'll get £0"

jazzythumper

Our lease says

"Not at any time during the term to make any alterations or additions to the Demised Premises or to cut maim alter or injure any of the walls or timbers thereof or to alter the Lessor’s fixtures therein without first obtaining the written consent of the Lessor (such consent not to be unreasonably withheld or delayed)"

This article here https://www.lease-advice.org/article...-be-justified/ would suggest that they should not be charging a premium at all.

eddddy

jazzythumper said:

Our lease says

"Not at any time during the term to make any alterations or additions to the Demised Premises or to cut maim alter or injure any of the walls or timbers thereof or to alter the Lessor’s fixtures therein without first obtaining the written consent of the Lessor (such consent not to be unreasonably withheld or delayed)"

This article here https://www.lease-advice.org/article...-be-justified/ would suggest that they should not be charging a premium at all.

Yep - the lease allows you to make alterations and additions with the freeholder's consent, so as I said above, the freeholder can charge you a fee for consent (probably a few hundred pounds), but no premium.

Perhaps you should look at challenging the premium that the freeholder charged you last time for extending the property.

jazzythumper

To explain the last consent involved work to another flat and part of the building outside our demise, so we don't feel that this was unreasonable. It probably makes this more unreasonable.
When you say charge for consent, is that to cover costs, not to make a profit?

eddddy

jazzythumper said:

When you say charge for consent, is that to cover costs, not to make a profit?

Yes - the fee is to cover their reasonable costs.

In the past tribunals have agreed that around £50 + vat per hour is a reasonable charge for admin tasks (like recording details in files, writing letters etc).

I don't know what extending your summer house involves - but more generally, if you were cutting holes in walls etc, it might be reasonable for the freeholder to instruct a structural engineer to check that you're using the right size of beam, a surveyor to check for compliance with fire resistance etc, and a surveyor to check that the builders are doing what they're supposed to etc. And you would have to cover those costs.

Also, if the lease plan needs updating because of the extension, you'd have to cover those costs as well.