Big problem and legal costs extending my lease!

by Readers Question

13:31 PM, 6th June 2016
About 3 years ago

Big problem and legal costs extending my lease!

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Big problem and legal costs extending my lease!

I am trying to do a simple Statutory lease extension on a fairly ordinary flat in a block of about 40 flats. The lease has 93 years to run. A Section 42 notice has been served and both valuers have agreed a fair compromise figure of £5000 for the lease premium. big problem

However the landlord has only ‘provisionally’ agreed the £5000 and will not definitely agree to the £5000 figure unless we agree to pay his valuer and solicitor about £5500 in costs! This is about twice the going rate. We cannot move forward on this until the premium is agreed.

This is really blackmail – it is not supposed to be like this. We cannot challenge their costs because the Tribunal rules say that their costs cannot be challenged until the premium has been mutually agreed or determined by the Tribunal.

Now they know that using professionals it will cost me about £2500 in fees and charges to go to the First Tier Tribunal to get the premium determined so I might as well just pay their fees and save the hassle. Now I don’t like being taken for a ride and in effect being robbed.

I am retired, and have spare time, so I have decided to take them on myself with a personal application to the FTT to firstly get the lease premium fixed by them. I am going for a hearing because my time costs very little and I can explain the tricks the other side are using. Also the landlord will not be able to claim back the costs of his advisers at the hearing.

What I really don’t understand is why the landlord is so adamant that I pay his excessive freeholders costs. All the landlord should only be interested in is getting paid his premium, unless perhaps he is getting a cut or backhander from his advisers. This is the very first lease extension I have done – just my luck to deal with a bunch of crooks.

My valuer says my case is not uncommon and this ploy whilst not illegal is definitely against the spirit of the LRHUDA 1993. My valuer also says it is more common when the lease premium is quite low and they rely on the fact that that it is not worthwhile for the leaseholder to challenge the premium at the FTT.

I hope that my case goes to a hearing at the FTT so that I can make the tribunal aware of this type of malpractice. I also will be asking the tribunal to award me me costs of my application and hearing fees.

Silversurfer



Comments

Eudora Burn

8:39 AM, 7th June 2016
About 3 years ago

After nearly a year of wrangling we will complete the lease extension on a flat this week. We used a company for the valuation and negotiations, I think they did a good job. We we did not have the experience or time to deal with it directly with the landlord. Also the standard offer that this landlord gives was not acceptable. With the fees, I thought they were set and the landlords legal fees had to be 'reasonable'. Our sums were higher for lease extension £18k but we achieved better a much better deal than the landlord was originally offering. I think the leasehold laws need review as the Landlords can play games.

Clint

10:50 AM, 7th June 2016
About 3 years ago

I find your case quite intriguing as I have had leases extended for my properties and am at present dealing with some extensions. I have used valuers in the past for valuing my properties and as you know, it is statutory that the leaseholder has to pay for the freeholder's valuer's and solicitor's costs.

I have so far had 16 leases extended much of which have been in blocks so several have been done at the same time. I presently have 11 leases left to extend and now as a matter of course serve the section 42 notice, wait for the counter notice, negotiate with the landlord's valuer during the two month statutory period and thereafter immediately apply to the First Tier tribunal as I have to date not come across a landlord that has been reasonable with the premium and costs. Most landlords will attempt to inflate the premium and costs knowing that most leaseholders would take the route of settling usually at much higher premiums and costs as they would not want to go the tribunal where they would have to pay their own valuer's and solicitor's cost which could be very substantial. Having dealt with this before, I have also found that landlords very often imply that their costs of attending the tribunal have to be paid by the leaseholder which is not true.

I think that you will find that once an application has been made to the tribunal, your negotiating power is much better and could save you thousands. To date I have not had to attend the tribunal as we have been able to come to an agreement on the premium and costs before the tribunal dates.

I recently extended a lease where we settled on the premium and I just could not get a figure for the landlord's cost until the very last minute where I had to pay an extortionate amount which I did on the proviso that I was leaving the matter to the tribunal to assess.

Eventually, I won the case where there was a paper hearing where I did not have to attend the tribunal and the costs were halved in my favour.

Having gained experience with lease extensions, I have found it best to engage a solicitor to just serve the section 42 notice and act on completion and I act on my own in respect of valuation and negotiating where I tend to find that I have a much better outcome and am in control of the process.

15:21 PM, 7th June 2016
About 3 years ago

Reply to the comment left by "Eudora Burn" at "07/06/2016 - 08:39":

I extended a lease on a flat a couple of years ago. Luckily I had a good solicitor who picked up on the new lease that the freeholder had doubled the ground rent every 25 years instead of increase by a modest amount. When the solicitors bill for the freeholders solicitor came it was also double what the freeholder had said it would be. My solicitor managed to get them to change both but you really have to watch them.

Roger Andrews

21:45 PM, 14th January 2017
About 2 years ago

Hi mention you do you own negotiations .Have just received my lease extension quote from freeholders agent .Obviously I would like a better deal ! (without the need of instructing any professionals). How would I word this counter offer / negotiate.
Legally they don't need to reply (only if you go down the statuary process). Any advice would greatly appreciated


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