Lease extension valuation cost

WKaren

I am in the nightmare position of trying to extend a 55 year lease.
I initially approached the managing agent who has advised the landlord's specialist valuer fees to be 10k. This sounds astronomical to me and guessing need to go down the statutory route.
Any idea on what costs would be reasonable (waiting to hear back from my solicitor).

Mark_d

https://www.gov.uk/leasehold-property/extending-changing-or-ending-a-lease

WKaren

Mark_d said:

Doesn't that calculate the price of the lease extension itself? The £10,000 is for the cost I've been quoted for the landlord's surveyor carrying out a valuation.

eddddy

WKaren said:

I am in the nightmare position of trying to extend a 55 year lease.
I initially approached the managing agent who has advised the landlord's specialist valuer fees to be 10k. This sounds astronomical to me and guessing need to go down the statutory route.
Any idea on what costs would be reasonable (waiting to hear back from my solicitor).

£10k for a valuation is ridiculous.

Or do they mean £10k as the freeholder's total valuation and legal costs?  Even then, that's 2 or 3 times more than I would expect.

And... you might pay the £10k (or whatever) for the valuation, and then the freeholder quotes a stupidly high price for the extension - which you reject, and so you've lost £10k.


For the statutory route, I'd expect to pay fees of around...

• £3k to £3.5k for the freeholder's valuer and solicitor
• plus £1.5k for my own valuer and solicitor

That assumes it doesn't go as far as Tribunal.

youth_leader

I've just helped my aunt do this for her 74 year lease, with @edddy's help.  Unfortunately your lease length does involve you in 'marriage value' ie 50% of any profit in your valuation to be paid to your freeholder.  I tried informal but nothing happened, so my aunt had to go formal with a Section 42 which has a time limit.

My aunt paid a chartered surveyor £200 to value her lease.  I never saw his report, but there didn't seem to be very much detail. He valued her lease extension of 99 years to be between £11-12K.  Her freeholder did accept £9K verbally and shook on it, then told her solicitor she wanted £10K. 

My aunt only had £10K in savings, she is 87.  I can't remember her solicitor costs, I think it was about £650,

To help my aunt, I offered to pay her freeholder's solicitor costs.  I was a bit annoyed when she messaged me to ask for the £50 deposit so 'she could instruct her solicitor'.  She also thought she could access my aunt's chartered surveyor's survey and my aunt's solicitor said no.  I did offer to pay for her to employ a surveyor. 

It's all been too much for my aunt and she is now saying she is in a quandary as she isn't 'ready'.  She's well at the moment and I'm going over next May to see her, but I refuse to have anything to do with her flat sale if she does decide to move.

WKaren

eddddy said:

WKaren said:

I am in the nightmare position of trying to extend a 55 year lease.
I initially approached the managing agent who has advised the landlord's specialist valuer fees to be 10k. This sounds astronomical to me and guessing need to go down the statutory route.
Any idea on what costs would be reasonable (waiting to hear back from my solicitor).

£10k for a valuation is ridiculous.

Or do they mean £10k as the freeholder's total valuation and legal costs?  Even then, that's 2 or 3 times more than I would expect.

And... you might pay the £10k (or whatever) for the valuation, and then the freeholder quotes a stupidly high price for the extension - which you reject, and so you've lost £10k.


For the statutory route, I'd expect to pay fees of around...

• £3k to £3.5k for the freeholder's valuer and solicitor
• plus £1.5k for my own valuer and solicitor

That assumes it doesn't go as far as Tribunal.

Thank you.

The 10k is definitely for the valuation fee only, they stated that their solicitor's fees would be in addition to this. I have emailed back to query the cost prior to moving to statutory. I will see what happens.

WKaren

So after now having asked twice they have confirmed that it was a typo. £1000 due not £10,000,

Thank you for your help.

eddddy

WKaren said:

So after now having asked twice they have confirmed that it was a typo. £1000 due not £10,000,

Thank you for your help.

£1000 for a valuation is still a bit on the high side - but maybe not too bad.

What are the terms of the valuation? For example, adding 90 years to your lease and reducing your current ground rent to zero? Or something else?



Presumably, you realise that the valuer will be working for the freeholder and not you. So typically, you will never get to see a copy of the valuation report.

And for example, the valuer might tell the freeholder that £25k is a fair price for the lease extension, but the freeholder tells you they want £50K.

If that happens, you might choose to ignore the freeholder's offer and go down the statutory route. But then the freeholder might ask for another £1000 to do another valuation. (i.e. you've essentially lost the first £1000)


I'm not suggesting that you shouldn't follow this route, I'm just suggesting that you should be aware of the risks.

youth_leader

That is a dreadful typo!

I forgot to mention that I did approach 'Homehold', mentioned in this MSE article.  They value the lease remotely, and will negotiate with the freeholder for you, as well as having a solicitor to sort out the contract etc. The cost of this for my aunt's one bedroom flat with 74 years left was fixed at £2,500.  I wish she had agreed to use them but they had reservations because of her age.  @edddy told me later that her solicitor, her executor, could have continued the transaction if she died.

Extend your lease: a step-by-step guide - MSE

eddddy

WKaren said:

So after now having asked twice they have confirmed that it was a typo. £1000 due not £10,000,

Actually... if you were really cynical, I guess you might wonder if it was a strategy...

"Let's try quoting £10k for a valuation, and see if they'll pay it...
...If they challenge it, we'll say it was a mistake and reduce it to £1k."

If that's the case, they might take a similar approach when offering a price for the lease extension.


More generally, what you're doing is called "informal negotiation". You need to trust your freeholder if you do that. There's a lot of scope for a freeholder to trick you and/or mess you about with that approach.

And the freeholder has more incentive to trick you or mess you about if your lease only has 55 years remaining.

If you don't trust the freeholder, you should go for the statutory route.