How much can a freeholder charge for a premium?

nomadicrebel

Evening all,
I hope you are all well.
I am looking to extend my ground floor flat due to a second child on the way. My lease is restrictive in that I am not allowed to do anything structural. 
However I doubt the extension will add more value after the cost of the work. Expect it to be a maximum of £10K. I understand the freeholder will want half of that amount, but can he ask for more, and if he does, can I do anything about it?
Thanks in advance
Dan

eddddy

If you want to build the extension on land which isn't demised to you, the freeholder can charge you any premium they choose.  (A valuer might suggest that you get half the profit, and the freeholder gets half the profit - but that's not a fixed rule.)

Or the freeholder might decide not to agree to you extending the flat.

The freeholder might also want your plans checked by their appointed structural engineer, building surveyor, etc - which you'll have to pay for. Plus you'll need to pay for planning consent (there's no permitted development for flats), and buildings regs sign-off - your freeholder will probably want to see proof of those as well.

And the lease and lease plan will probably need updating, so they'll be a chunk of legal fees for doing that.

nomadicrebel

Hi Edddy,
Many thanks for the swift reply. Aware of paragraphs 2 to 4. It is the first paragraph that I sought clarification on. The alternative is to do collective enfranchisement. 
Thanks.

eddddy

nomadicrebel said:

Hi Edddy,
Many thanks for the swift reply. Aware of paragraphs 2 to 4. It is the first paragraph that I sought clarification on. The alternative is to do collective enfranchisement. 
Thanks.

If you did a collective enfranchisement - how many leaseholders are you expecting to participate? Are you sure that would make things easier?  It could make things much more difficult - especially if there are lots of joint freeholders.

All (or most) of your neighbours would become joint freeholders of the building. Trying to get all of them to agree to your proposals might be challenging. They might want a bigger premium than your current freeholder. (Or have you already got some kind of agreement in principle from them?)

Would you be offering each individual joint freeholder enough premium to get them interested? Might any of them have a reason to oppose your extension plans?

nomadicrebel

Hi again,
The upstairs leaseholder rents the property out. However there is significant development for him to develop the loft space at a later date. So there are only 2 flats in conversion. The alternative is that I buy the freehold outright. But I'd rather just do the conversion for the additional space.

NameUnavailable

You own a lease which is a long term rental agreement. You don't own any part of the actual property or ground that it's built on.

If you extend you are presumably taking up space that is currently used as communal grounds or parking or whatever.

It is entirely up to the freeholder if they decide to let you extend and for what cost. If you buy the freehold with the other party then it's entirely up to them to co-operate with your plans. They may not and then you're no further forward. If the freeholder is willing to sell then it has to be offered to your neighbour as well - if they aren't interested then yes, you could buy the freehold and do what you want - as long as it doesn't affect anything in the terms of the neighbours lease (i.e. if it's a communal garden you still can't just extend into it).

Maybe easier to think about moving as another option?