Lease extension valuation.

Karhut

Hi,
I need advise on a  flat lease extension. I was going to ask the Freeholder ( a high street bank)  informally for a lease extension .
The building is managed by a well known estate agents / surveyors and I expect the freeholder will use them to value the lease if I ask the bank informally to extend the lease.
Now my question is , is it best to get a surveyor/ valuer of my choice and serve notice on the freeholder ,will it make no difference weather the valuer is the freeholders or mine ?

I have done a lease extension on a previous property some years ago and I had the property valued by my surveyor, the freeholder accepted the valuation and price/ terms , it was straightforward . My solicitor did the legal work .
Thanks.

eddddy

If you do an informal lease extension - there are no standard rules that anyone has to follow.

• You can offer any amount you like, for any number of any extra years on the lease you like

• Similarly, your freeholder can ask for any amount they like, for any number of any extra years on the lease you like

A professional valuer will tell you what they think the cost would be, if you followed the statutory route and the case went to a tribunal to decide.



So a freeholder's valuer might provide a report like this (I'm using made-up numbers to illustrate)  :

"In our opinion, if this case went to tribunal...

• ...in the best case, the tribunal might decide on a payment of £15k
• ...in the worst case, the tribunal might decide on a payment of £11k
• ... but the most likely outcome is that the tribunal would decide on a payment of £13k

Therefore, we recommend that you start the informal negotiation by asking for £16.5k"

And your valuer's report might look like this:

"In our opinion, if this case went to tribunal...

• ...in the best case, the tribunal might decide on a payment of £10k
• ...in the worst case, the tribunal might decide on a payment of £15k
• ... but the most likely outcome is that the tribunal would decide on a payment of £12.5k

Therefore, we recommend that you start the informal negotiation by offering £9k"

So it's up to you which way you play it.

The freeholder is very likely to ask you to cover the cost of their report - and they probably won't tell you what it says.

Karhut

Thank you for your reply.
Perhaps best to get my own valuer in that case and send the report to the freeholder , will the freeholder get their own valuation as well and charge me the cost?

Jonboy_1984

Yes they will charge you for their valuation, and again if/when nothing is agreed and you need to apply for a statutory extension.

Something to be aware of is that is you have a mortgage the mortgage company will need to approve the terms of an informal extension which often come with changes to the lease, but not a statutory extension.

eddddy

Karhut said:

Thank you for your reply.
Perhaps best to get my own valuer in that case and send the report to the freeholder , will the freeholder get their own valuation as well and charge me the cost?

The freeholder won't necessarily trust your valuer's report - so they'll probably want a valuation report from their own choice of valuer.

Freeholders almost always expect leaseholders to pay the cost of the freeholder's valuation report.

Karhut

Thank you for your advice.

Jonboy_1984

Karhut said:

Thank you for your reply.
Perhaps best to get my own valuer in that case and send the report to the freeholder , will the freeholder get their own valuation as well and charge me the cost?

Sorry missed this, your report will come with strict warnings not to share it with the freeholder as it will have a range of valuations, with the expectation you will enter a negotiation process. 

your surveyor will likely start with an offer below the estimated range, and won’t want to be under-mined at the beginning.

eddddy

Jonboy_1984 said:

Sorry missed this, your report will come with strict warnings not to share it with the freeholder as it will have a range of valuations, with the expectation you will enter a negotiation process. 

your surveyor will likely start with an offer below the estimated range, and won’t want to be under-mined at the beginning.

Just to clarify - that is one way somebody could choose to proceed, but other people might choose to proceed in a different way.

There are no fixed rules for an informal lease extension.

(Even with the statutory route, it's not vital that you approach negotiation in the way you describe.)



As an example, on one occasion my solicitor suggested that I pass all the details of my lease extension valuation report to a freeholder,  in the hope that it would speed-up the process.

But that was a tactical decision based on the specific freeholder involved. TBH, if the OP's freeholder is a large High Street bank, that tactic might not make much difference.

Aberdeenangarse

Sorry to butt in, but does anyone know where there’s a ‘template’ I can use to request my leaseholder for an extension. I’ve two BTL’s one has 83 years left on the lease and the other 86. Thought I’d better act now before marriage values come in.

eddddy

Aberdeenangarse said:

Sorry to butt in, but does anyone know where there’s a ‘template’ I can use to request my leaseholder for an extension. I’ve two BTL’s one has 83 years left on the lease and the other 86. Thought I’d better act now before marriage values come in.

Just to clarify, it sounds like you're a leaseholder - and you want to contact your Freeholder to discuss a lease extension.

There are 2 routes to extending a lease...

• The statutory (or formal) route
• The informal route

See: https://www.lease-advice.org/article/lease-extension-of-leasehold-flats-the-two-routes/


It sounds like you want to try the informal route. There isn't really a template. (You'd treat it a bit like buying a flat, or buying a secondhand car)

You could phone or email or write to your freeholder saying you'd like a lease extension (e.g. an extra 90 years), and asking if they'd like to quote a price.

The freeholder might quote a price straightaway, or they might say they want a valuer to take a look (and they'd probably expect you to pay the valuer's fee.)

Bear in mind that a 'nasty' freeholder might suggest a ridiculously high price.

Then you might negotiate (or haggle) to get the price down.




There's some useful info on this website: https://www.lease-advice.org/topics/?topic=lease-extension

Aberdeenangarse

That’s really helpful, many thanks. Yes, sorry I’m the leaseholder. I’ll contact the Freeholder, Clarion Housing.