Specialist Lease Extension Surveyors – a necessity or a luxury?
Anyone wanting to extend the leasehold on their flat under the provisions of Leasehold Reform, Housing and Urban Development Act 1993 (as amended) will require the services of a professional valuation surveyor experienced in the field of lease extensions. The primary reason for needing such a surveyor is that, even before the applicant’s initial notice of claim is served on the landlord to initiate the application process, it needs to contain a realistic level of premium payable to the landlord for the lease extension under the terms of the Act. If the premium offered in the notice is completely unrealistic, the notice will be invalidated.
Making sure that the premium is realistic is crucial and requires the surveyor to have specialist knowledge and experience in depth in the field of leasehold extension.
Calculating the premium for the lease extension – a job for a professional
The landlord/freeholder’s interest in the property will be worth less after the new lease is granted that it was before – due to the loss of ground rent income and the loss of the right to get the flat back when the original lease expires [which is called the reversionary interest]. This loss of value suffered by the freeholder is called, in the words of the Act, ‘the diminution in value’.
The surveyor will consider this diminution of value, together with the landlord’s share of the marriage value, plus any compensation payable, when calculating the premium. This is complicated work and there is no alternative to doing this as they are the factors laid down by the Act for calculating that premium.
If the existing lease has eighty or more years to run the marriage value (the marrying of the freehold and leasehold interests) will be zero, but below eighty years to run and the landlord will be entitled, under the legislation, to 50% of whatever the marriage value is calculated to be.
A further allowance may also be made for what is called “hope value”. This means if there is some sort of potential further value attached to the freehold (say if there is a large garden and the possibility of building a second property, or extending the current property), the freehold could attract a greater value – and therefore the premium payable to the freeholder might increase.
A depth of experience of comparable lease extensions, the state of the local open property market and a familiarity with valuation tribunal decisions, all feed into the basic maths when the surveyor calculates the value of the premium and negotiates it with the landlord/freeholder.
Making sure you don’t pay too much for your lease extension – another job for a professional
Once the landlord has responded to the applicant’s notice of claim with a counter notice, the surveyor will need to respond to that counter notice where it touches on the value of the premium. This might need detailed discussion and an arguing of factors involved in order to reach a premium level agreeable to both parties.
It is during such negotiations that the experience and specialist knowledge of the applicant’s surveyor can ensure that their client does not pay over the odds for the lease extension. The applicant’s solicitor fulfills a similar role with regard to any proposed changes to the terms of the lease and ensuring the entire process is followed to the letter of the law.
Expert witness at the First-tier Property Tribunal – a job for a professional
Should negotiations between the leaseholder and freeholder become dead-locked, the applicant’s solicitor will have the case put before the Leasehold Valuation Tribunal [though we should really call it by its new posh name – “ the First-tier tribunal – Property Chamber (Residential Property)]. There the surveyor will prepare and present the necessary proof of evidence taking on the role of an expert witness and if counsel has been appointed, the surveyor will brief them as appropriate.
Looking For A Specialist Lease Extension Surveyor – We Can Help
Over the last 20 years, our specialist team have helped thousands of leaseholders and freeholders to extend their lease. As a result, we have developed a network of surveyors who specialise in leasehold extensions throughout England and Wales.
So wherever your property is in England and Wales, we can help you with the legal side – and put you in touch with a surveyor who really knows what they’re doing when it comes to lease extensions.
• Just call us on FREEPHONE 0800 1404544 for a FREE initial phone consultation and a FREE quote for extending your lease OR
• Complete the contact form below
Comments or questions are welcome.