Freeholders valuer not authorised to negotiate the premium

by Readers Question

9:09 AM, 8th June 2016
About 3 years ago

Freeholders valuer not authorised to negotiate the premium

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Freeholders valuer not authorised to negotiate the premium

I am on the process of extending my lease. My surveyor has informed me that the Freeholder’s surveyor is not authorised to negotiate the premium! Is this normal?authorised

My surveyor is going to contact and negotiate with my Freeholder directly. My Freeholder is a large company with more than a thousand property in their portfolio and I am certain that my Freeholder will play hard ball and probably ignore my surveyor.

My solicitor is saying that my Freeholder does not have to negotiate the premium if he does not want to and he can apply to the tribunal. Has anyone got any experience of this? I am worried that the cost of tribunal would be huge. Any advice would be most appreciated.

Many thanks

Martina



Comments

Clint

10:43 AM, 9th June 2016
About 3 years ago

I had just written an article on extending a lease on this website which you may find helpful. You should note that each party pays their own costs at the tribunal which means you would only be responsible for your own valuer's and solicitor's costs and not that of the freeholder.

If you feel you could represent yourself, then do so and you will find you are in a much better situation as the freeholder would have to pay their own costs of representation in the tribunal. You could get all the required information from your surveyor if the surveyor is willing to help you.

You could apply to the tribunal yourself and hopefully this would put you in a much better position to negotiate the premium and costs. In most cases, premiums and costs are agreed before the hearing date as the Freeholder however big would not necessarily want to pay the costs related to the tribunal which could be thousands of pounds.

Just out of curiosity could you tell me who the landlord is? I have dealt with two very big landlords and have had successful outcomes and I am a lay person with limited experience of lease extensions

Maria M.

12:20 PM, 10th June 2016
About 3 years ago

Client thank you very much for your comments. The Freeholders is *****Edited*********. I have feeling that In addition to not agreeing to any negotiation on the premium, they will also ask for a large fee for their valuer and legal costs.
I also have a number of defects in my lease, which the Freeholder will not agree to change. The Freeholder has never provided us with Block Insurance. All be it that the flat is in a small block of six flats. Also there is no block maintenance, so there is always a problem with other leaseholders, not bothering to sort things out as and when needed. All flats are rented with Landlords who do not care or understand the implication of maintenance. In your experience do I have a chance to remedy some of these defects if I go to the Tribunal? Any advice would be greatly appreciated. Has anybody had experience of tribunal changing the lease defects considering that the other leaseholders are not bothered to change any of these defects which is baffling to say the least.

Clint

15:04 PM, 10th June 2016
About 3 years ago

Hi Maria

With regards to costs and the premium, if it does go to a hearing, you will need to show that the costs are too high with comparisons of solicitors and valuers acting in the same area. If you are intending on representing yourself at the tribunal, it would be advisable to give the freeholder the impression that you are confident and experienced in representing yourself. I doubt that they will not agree to a reasonable settlement bearing in mind the costs that they will have to pay. Be aware, that from experience with Freeholders, they usually wait until almost the day of the hearing before they bend. This puts the pressure on you as it involves a lot of work. especially in preparing bundles for the case and gathering information for your case.

With regards to the defect in the lease, I believe you will need to have an experienced solicitor to do this as the wording has to be correct. This could be expensive especially if you need a solicitor to attend the hearing. I usually don't bother with the wording as it only incurs additional costs of both solicitors which the leaseholder would have to pay for and this is usually quite excessive. One can usually get indemnity insurance at the point of selling the property if the defect in the lease effects the price.

With regards to maintenance of the block, this is usually a difficult one especially if the other leaseholders are not interested in having anything done. I think you will find that you would have to have a separate hearing for this as the hearing for the extension of the lease would only deal entirely with the lease extension and an update of the wording or clauses of the lease if this is necessary.

If the lease is updated to be in your favour, you still have the problem of getting the Freeholder to carry out their obligations which once again would mean an application to the tribunal where you would need the support of the other leaseholders.

I have several properties in two entirely different blocks where in both the service charges are excessively high and virtually nothing or very little is ever done. In both cases, I have heard many leaseholders complaining and mourning about being ripped off but not wanting to do anything.

There was a lady who took it on herself to challenge the service charges in one of the blocks and went about it by dropping flyers regarding a meeting she wanted to hold before making an application to the tribunal. On the day of the meeting although, there are fifty four flats only three leaseholders turned up which gives one an indication of what to possibly expect.

With regards to building insurance, this is another area which can be profitable for the freeholder as, if the freeholder has a large number of properties, the freeholder can strike a deal with the insurer where they get a "Kickback" so they are not necessarily interested in the interests of the leaseholder but only on the additional profit they can make.
Unfortunately, this is acceptable and within the law but obviously is called something else and not a "Kickback". It is also acceptable for the freeholder to insure a large number of properties with one insurer and not necessarily with one that quotes the best premium for the area and one that provides the best benefits

Maria M.

1:06 AM, 11th June 2016
About 3 years ago

Reply to the comment left by "Clint " at "10/06/2016 - 15:04":

Hi Clint,
Thank you very much for all your advice. My solicitor has told me that he can apply to the tribunal on my behalf and force the Freeholder to lower the premium. I am not sure how to prepare bundles or how to represent myself. I guess my solicitor has to do all of this which will be very expensive. I would think what I will gain by getting a lower premium if successful, has to be spent on my solicitor's fees for representing me. Is it all going to be worth it?

Is the indemnity insurance for the lack of block insurance or lack of block maintenance?

In summary you recommend that I do not bother about the changing the wording of my lease in other words leave it as it is and just get indemnity insurance before I sell the place. Have I understood this correctly?

I have heard that it will be difficult for any prospective buyer to get a mortgage on my flat as the CML's guidelines or is it the mortgage companies do not easily give mortgage to the flats without block insurance. Is this correct?

I think the law is really unfair and mainly on the side of the Freeholder. They can charge any premium they like, they can ask for well above the market rate for their valuers and legal costs as they know they can get away with it.
I am so very grateful for your advice and would like to thank you again.

Clint

14:23 PM, 12th June 2016
About 3 years ago

It is a difficult question as to if it is going to be worth it as, there are no guarantees to the outcome of the hearing and you could be worse off. Until you know what the premium is after serving the section 42 notice, you would not know where you stand. You can only decide after valuation of both surveyors and the premium offered what you should do. Ultimately, a freeholder cannot charge what they like as you have the option of going to the tribunal but you have to see what costs are involved and make a decision.

I don't believe that there is a problem in getting a mortgage if the flat is insured but your solicitor can advice on this.

I think if you are finding it difficult to deal with the lease extension yourself, you will have to use a solicitor and surveyor to arrange the extension of the lease.

I don't believe that I have any more expertise to be able to help you any further.


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