Lease extension in most cost effective way?

by Readers Question

10:58 AM, 27th July 2015
About 5 years ago

Lease extension in most cost effective way?

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Lease extension in most cost effective way?

I have 56 years lease left in a flat. I am hoping to extend the lease. I understand that I can apply for Statutory 90 years lease extension plus pepper corn rent. I am hoping to increase my lease without spending a lot of money on solicitors. Can I do the initial negotiations and test the water and see how much my Freeholders are going to ask for? Lease extension in most cost effective way

Is it a good idea to write to my Freeholders directly and ask them informally if they are agreeable to increase my lease on Statutory basis of 90 years extension and zero ground rent? and if they are agreeable, how much will it cost? Or am I totally out of my depth here?

I am aware that in addition to my own surveyor’s and solicitors fees, I have to pay my Freeholders Surveyor’s and Solicitors costs as well.

Do I have to have a RICS and ALEP surveyor and solicitor?

Will my new lease be the same as my existing lease or will it vary?

How do I ensure that I do not end up getting less favourable terms?

Your comments are most appreciated.

Thank you

Martin


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Comments

Si G

15:42 PM, 27th July 2015
About 5 years ago

Hello Martin, yes do as much as you can yourself the lease extension is a gravy train for surveyors and lawyers. Also get at least three quotes for any work you need done. As your lease is less than 80 years you will need to pay more for your renewal than if it was more than 80.
Good luck.

J Kaapa

11:49 AM, 4th May 2020
About 7 months ago

I just saw this today (five years old query). I just wanted to tell about my experience regarding lease extension. Yes, anybody can contact the freeholder 'directly' and ask about formal (statutory section 42 notice extension giving you 90 years + no ground rent) or informal (to try and get an equivalent deal to statutory and if successful one can cut legal etc costs by doing so). However, I made a mistake by asking the freeholder about the extension informally and they asked me to pay £389 for their 'surveyor costs' and in the end it was a pointless exercise as their extension offer premium was very high. So, in the end that £389 was something I had to 'write off' at the end of the process. Why was it pointless? Because I learnt that what you should do is the following:
Step one: find a surveyor for yourself FIRST because it appears that you need an 'outside' expert to negotiate the extension deal . The surveyor will provide you with the valuation report. At this point DO NOT engage any solicitor (you would just be wasting money on charges)
Step two: when you have the valuation report from your surveyor (this cost me £600 incl. VAT and also included the deal negotiation) you then look for a solicitor. Ideally try to find one who can give you a lump sum quote for the extension work, not hourly paid quote. Solicitors will argue that it is difficult to price something which may require 'extra legal work'. Ask them different lump sum scenarios. For example, them serving freeholder section 42 notice and if all goes well (without any tribunals) what will the price be including the conveyancing (which is done at the end to formalise extension).
Step three: once you have identified the solicitor ask him/her to serve statutory section 42 notice to freeholder, the notice having an offer of the LOWEST premium given in the surveyor report.
Step four: freeholder should be given two months to respond with counter offer or accept yours. If they miss the deadline you can then legally require them to accept yours. Once their counter offer comes through and if it is clearly higher (mine was £6200 which ended up via surveyor negotiation at £3250) you will ask your surveyor negotiate with freeholders surveyor.
Step five: hopefully everything ends up mutually acceptable ways and your surveyor will inform you about the best price he/she can do. Once you accept it, you then get a formal confirmation (a piece of paper) from your surveyor which you then give to your solicitor to complete the legal process with the freeholder, and conveyancing (land registry etc....). My advice would be that YOU act as the hub of mediating between parties. For example, conduct the communications with the surveyor and solicitor by yourself and not so that the solicitor and surveyor are in contact UNLESS your lump sum offer from the solicitor includes this communication. Otherwise, the solicitor will charge you a lot per hour (mine was £240 per hour (incl. VAT) AND they count the minutes!!!). There is no need for the solicitor and the surveyor to talk to each other. You can easily relay the information/ documents to/from them yourself.
All of the above is to try and cut down all the excessive charges by these 'professionals' who charge you huge sums by repeating something they do all day long. They use set templates etc. to simply fill in your information into the documents. My overall costs for the statutory extension for my flat cost me in excess of £9000 of which the premium was, as mentioned above only about the third!! What should happen is that the government should stop this crazy system of 'leases'. Or, to put it briefly at least create a simple A4 proforma, downloadable from GOV web site for lease extension which you fill and which sets out the way via government approved 'calculator' what your lease should cost. So, you would just fill in the form, sign it and with reference to the gov proved calculator pay the freeholder the extension and then inform land registry; no surveyors, no solicitors. Best of luck. JK


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