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Making Alterations to a Leasehold Property

Making alterations to a residential leasehold property is not always a simple task. Many leases allow the landlord to charge alteration fees from the leaseholders. A Leasehold Valuation Expert will know about what steps should be taken in such cases.  

The common questions which are asked by the leaseholders about home repair and improvement are,

  • Can you make alterations to a leasehold property?
  • What fees can a landlord charge to the leaseholder? and does the landlord grant permission to do so?
  • Can you build an extension on a leasehold property?

Are you facing the same issues as a leaseholder or dealing with any other leasehold problems? Our Leasehold Valuation team can help you out with such leasehold issues.

Leasehold Property Alterations

Are you looking to make structural changes to your leasehold property? Then what should you check before proceeding further:

  1. Check your Lease Agreement: Some landlords may grant you permission in the lease only for making minor changes and alterations and some may not grant permission at all without seeking their permission first.
  2. Discuss with the Freeholder/Managing Agent: They will analyze if the proposed arrangement of a leasehold flat will cause any impact on the layout of the flat or will affect neighboring flats.

Even if landlords permit you to make alterations, they may restrict you by imposing certain conditions that may increase the cost of the works. Some may ask you to revert the alterations to the original at the end of the lease or at the time when you leave the flat in the future.

You should obtain legal advice from an expert or experienced chartered surveyor. You must seek permission for the alterations and improvements on the leasehold property in regards to building regulations, structural alterations, electricity, pipes leakage repair or gas line work, drilling walls, constructing a new kitchen or bathroom.

You should also put a Party Wall Award in place between yourselves and your neighbors (even if in an adjacent building)

The permission for proposed alterations will depend on how large the renovation or the alteration work is. For massive remodelings, the landlord may provide a license for alterations keeping in mind the effect of the alteration on the residential property. Even after leaving the property, it is crucial to know that the lease is planned to preserve the benefit of all the individuals and not harm the flat structure.

Costs of Alterations:

With regards the alteration cost, you may also have to pay a fee for the license to alter to the landlord. The Landlord and Tenant Act 1927, Section 19 states that the alterations license or consent permission is not to be irrationally denied, the right of the landlord to claim for the charges of a moderate amount is a legal right of the landlord. This may include administration charges, legal fees, hiring of technicians/engineers, granting a license, and reinstatement clause. 

The landlord may charge you more than the reasonable cost to make a profit. In October 2017 the Department for Communities and Local Government affirmed that the leaseholders may suffer unfair costs while making alterations to their leasehold property. The Conveyancing Association has concluded that 75 percent of leaseholders are paying unreasonable “regulatory” payments to their landlord or managing agent as standard and that schemes to correct this unreasonable behavior are inadequate.

In April 2018 the Ministry of Housing, Communities, and Local Government stated that the government and authorities will look into this unreasonable behavior and will investigate the fees that are sometimes more than the service charges, which can affect both the leaseholders and freeholders and examined under what conditions they are justified. 

A leaseholder has the right to question the unreasonable charges, if required, at the First Tier Tribunal or Leasehold Valuation Tribunal. But before applying to the tribunal the leaseholder should speak to a qualified professional in order to understand the application process as well as the law surrounding it. This is a complicated and time-consuming process. Therefore, it is suggested to first have a conversation with a landlord to see if this matter can be resolved.

If you have any questions or queries regarding the law and regulation of leasehold property alterations then you can contact one of our chartered surveyors without any hesitation.

Can a premium be imposed as a condition of granting permission?

This really depends upon what works are being undertaken and also what the lease states about alterations.

The demised premises are the premises included in the lease agreement. The demise premises do not cover the structural or exterior walls. It includes interior walls, interior roofs, or ceilings. Such elements are described precisely in the lease agreement in detail.

If the alteration to the demised premises has been accepted then a reasonable premium can be charged by the landlord. If the permission is refused then the leaseholders can ask for advice and help from the court or the Leasehold Valuation Tribunal. 

Alteration to the landowner`s retained property

The part which is not included in the demised property is the retained property and is a freehold or landlord property. Any alterations to the retained property are highly unlikely to be granted permission by the landlord.

If you are looking to undertake renovations or alterations, Leasehold Valuation Experts can help you in progressing through this process seamlessly. Call 01753542984 for a 10-minute free consultation for lease queries.

Shared Ownership Lease Extension UK

Shared Ownership Leasehold and Lease Extensions

Are you aware of what is shared ownership in lease extension, how it works? No, then you’re at the right place. Many people have the same confusion about how shared ownership relates to lease extension in the UK. Initially let us recall what is leasehold, Leasehold is an ownership of a resident for a long-term period. Generally, this could extend to 99 or more years and in this period the house can be sold or bought.

Leaseholders also have a statutory right to extend the flat lease if the term is exceeded more than 21 years. The value of the house shrinks down year by year till the lease expires. After which usually the ownership reverts to the landlord. A leasehold has the right and responsibility of all the interior and exterior residing of a flat. The leaseholders have to keep an eye on the maintenance and repairs of the entire flat.

What is Shared Ownership Leases?

In the same way as the leasehold ownership, there is another ownership named shared ownership. In which the leaseholders have the right to buy a share of the flat or a house and remunerate for that part of the property. Leaseholders possess the right to purchase multiple shares till it has 100% of proprietorship. At that stage, it would be converted from shared ownership to leasehold ownership. This ownership has come into existence for those who can’t purchase or manage to buy the full property. They can have a part of it at a great premium value. Substantially, it has been carried out by the housing associations of England as a section of their house ownership scheme.

Shared ownership of a residence has the statutory right to extend the lease and the landlord may have its approach and scheme plans. Leaseholders must look over with the landlord. It may vary depending on the landlord’s choices. From the Leasehold Reform Act 1967, has been stated that the shared ownership does not have the right to buy the freehold. It would be only preferable for those who cannot afford to buy the whole of the leasehold ownership. Hence, in shared ownership also the shorter lease issue will be there. The landlord has the right to take back the leasehold at any time. If the shared ownership is transferred to the landlord, then there will be no reimbursement given to the leaseholder.

Shared Ownership Properties and the Latest Updates

In the Leaseholder’s shared ownership of a flat, the leaseholder will have to manage all the maintenance and repairs of the flat. In a special case, if the property of the flat of leasehold is in the private sector, then the cost of the maintenance, like lane, corridors, and other improvements will be payable and will not charge to the leaseholder.

Homes England accepts shared ownership leases should have fundamental points to be focused on:

1. Restrain on selling and forbidding on sublease rental.

They do not permit sublease rental in any condition. Undergoing shared ownership lease, the landlord has the right to seize the leasehold ownership if they do not have 100% ownership. This conveys that if the leaseholder of the shared ownership wants to sell the freehold then he/she has to first recommend it to the landlord or to the buyer who has been suggested by the landlord. There are also new home rent review clauses upgraded.

If the landlord does not respond to the above right from the leaseholder in under 8 weeks then the leaseholder has the right to sell the freehold to any other buyer in the demand. For all the new sponsored finance for shared ownership houses provided through the low-cost homes program 2021 whereas the resale application proposal time period has been lowered down to 4 weeks from 8 weeks.

In the 2021 plan update, the Home programs came up with a new financial policy in which the shared ownership leaseholder will be benefitted. In which they have planned that the landlord has to pay the maintenance and repair cost to the shared leaseholders for up to 10 years in the newly constructed homes. There is also a mortgage section classification planned in support of the mortgage lender and for the shared ownership leaseholders. In which loans can be provided to the leaseholder for their shared properties with mortgage protection.

Few of the shared ownership leases of flats in the countryside limits the right of the leaseholder to buy the property shares to 80%, or in case if the leaseholder is permitted to transfer to 100% of the proprietorship then he/she has the responsibility to revert the property to the landlord or any other purchaser who is willing to buy. Besides this to the countryside allowance, a shared ownership leasehold house for aged people can restrict the property share to 75%.

As all the new granted financial support for shared ownership houses given by the Affordable Homes program 2021 – 2026 and presented through Section 106 is decreased from 25% to 10% and also included an additional progressive 1% staircase process.

To calculate the cost of a shared ownership lease of property you may check out our free online lease extension calculator. It will give you an estimated cost of your shared lease property. Our Leasehold Valuations team can also help you and guide you in all kind of lease extensions and lease enfranchisements process. Contact us without any hesitation, schedule 10 minutes free consultation with one of our chartered surveyors to resolve your issues or queries related to shared ownership rights and government acts to it.

Statutory v/s Informal Lease Extension – Benefits and Risks

Investing in a residential property is always considered to be safe. If you own a leasehold property, the value of your property can depend on the remaining number of years left on the lease. You should try to extend your lease before it drops below 80 years. If you own a leasehold property, then after two years you’re eligible to extend your lease. There are 2 ways in which you can do this.  Firstly, with the formal(Statutory) route and secondly but approaching your freeholder directly and asking how much he will want in order to let you extend your lease. This second route is known as an informal lease extension.

Informal Lease Extension

The informal lease extension will not provide any protection whatsoever to you with regards how the freeholder acts. The informal lease extension begins by communicating with the freeholder to see if he is willing to agree to you extending your lease. If so, you can then proceed to the negotiation stage and discuss the lease extension’s new terms, which will include the length of the lease, lease extension cost, and payable ground rent.

There are several benefits that you can get from informal lease extensions:

  1. Minimize the legal cost compared with the statutory cost. (no notice procedures)
  2. Quicker lease extension as no formal process is required to be followed.
  3. No criteria are needed.

The aim of this route would be to reach a mutual agreement. Both sides can negotiate and agree to change the lease terms. You can get a rough lease extension cost calculated by the lease extension valuation calculator online conveniently. With these online calculators, you can obtain an estimated lease extension cost that can be used during your lease extension negotiation process. The leaseholders who don’t have much time and money follow this procedure rather than choosing a statutory process and infusing themselves in professional negotiations for both parties. In this process, any party has the right to change the terms of lease extensions.

As there are no rules, no regulations in this method hence,

  • The freeholders can drag their heels to complete the process.
  • The landlord can ask for any amount of premium and the leaseholder would not be able to apply to the tribunal to determine a reasonable amount as no notices had been served.
  • The landlord can request extortionate professional fees and again the leaseholder would not be able to apply to the tribunal
  • The landlord can simply choose to walk away at any time thereby wasting valuable time.
  • The freeholder has more advantages under this route and that is why the freeholder will usually try to convince a leaseholder to go down the informal route..

Statutory lease extension

The Leasehold Reform Housing and Urban Development Act 1993 controls the statutory lease extension process. Using this process, leasehold owners have the right to extend the lease of their flats. The leasehold owners are therefore urged to follow the statutory lease extension process. To extend the lease on your flat, you need to own the property for a minimum of 2 years.

The formal lease extension has the below list of advantages:

  • You can get a 90-year lease extension on top of your current lease term.
  • The payable ground rent will revert to zero.
  • The lease valuation date is frozen which means in the formal path, the premium value will no longer increase as the term decreases.
  • If you are on the formal path, you would be permitted protection when any dispute occurs. You have the right to take your case to the leasehold valuation tribunals(LVTs).

If you have owned the flat or house for a minimum of 2 years, then we recommend you to go with the formal(statutory) lease extension route. Get guidance from a professional leasehold valuation expert and carry out a lease valuation report. If you have not owned your property for 2 years then you have no choice but to go down the informal route. To get the best advice and guidance on lease extension valuation and lease terminology, you can schedule a 10-minute free consultation with our expert chartered surveyors at Leasehold Valuations.

What Happens When the Lease Expires on a Leasehold Property?

What happens when the leasehold expires?

In England, mostly all residential flats are leasehold as well houses are freehold properties. When the leasehold expires, the property reverts to a freehold property, where it is under the ownership of the freeholder in addition to you no longer having the right to stay there. Further, you can buy a new leasehold property, or generally, if you still want to stay there then you should not let it expire and should extend the lease earlier before the time clocks.

 

What happens if the lease is not renewed?

There are several possibilities in which your lease is certainly not renewed. 

  1. When a landlord decides to end a lease, they may send a lease non-renewal notice to their tenants. The non-renewal notice must be provided to the tenants on hand(in written). The landlord must not give any reason for ending the lease. Hence, the landlord will let you know if they want to end the lease further.
  2. Another possibility is your landlord wants to change your lease agreement plan with some new labels for which he/she would inform you.
  3. As a leaseholder, you should decide before a month about how you need to proceed when your current lease ends. You can discuss with your landlord how they will proceed further when the lease expires.

 

How to extend a lease on a leasehold property?

If you own a leasehold property or flat, you have the right to extend the lease with specific criteria. There are two simple ways of extending the lease: Formal and Informal. In the formal way leaseholder and freeholder both need to follow a firm procedure stated in the law. By following this way, the leaseholder will get more benefits and security. Another alternative method of extending the lease on a leasehold property is to approach the freeholder and decide whether to conduct a lease extension negotiation. If the freeholder accepts the approach, both parties will have to negotiate. 

A lease extension is a confusing task. We suggest you consult a Leasehold Valuation expert as professional valuation advice is crucial for extending a lease. Are you worried about extending the lease on your flat? A complete step-by-step Lease extension Guide will be right for you.

 

Can the landlord kick you out after your lease is up?

A landlord cannot end up your agreement directly after the lease is expired. The landlord can provide a 30 days notice period to end up with the lease agreement and follow specific procedures before they want to evict a tenant. The tenant must be provided with a notice period until which they can find another way out.

 

Can the tenant refuse to renew the lease?

The tenant has the right to not renew the lease with or without any legal reason. Even if the landlord wants to renew your lease agreement, he/she doesn’t have the right to renew it.  

 

Do you have to move out the day your lease ends?

Once the lease expires, you should move out and leave the house. If your lease ends on a specific day, you should move out before the day ends. 

 

Do you need to give notice if your lease is expiring?

If the tenant does not want to renew the lease at the end of the lease agreement, they have the right to move out. In general, tenants must provide a 30 days notice period to the landlord before ending the lease.

 

Why leases are for 99 years?

Under notable common law, leases are for 99 years. The longest possible term of a lease of residential or commercial property.

 

Anxious about the lease extension cost?

It is very crucial to learn about the lease extension process before the calculation of lease cost. The lease cost is also a required term during lease renewal or lease extension. Many homeowners and our grateful clients have calculated their lease costs with our Leasehold valuation calculator, you can also get professional advice from our experts.

Whether you need to extend your residential lease, need to buy your freehold of a leasehold house, want to calculate lease extension cost, Leasehold valuation experts can provide you with all the solutions. Get lease extension advice, calculate lease extension cost, lease extension negotiation with our professional team, who can help you from valuation of leasehold property to a complete survey report.

Read more:

How To Avoid Stamp Duty For Second Property

Making Alterations To A Leasehold Property

Shared ownership Lease Extension

How to avoid the most common issues in Lease Extension in UK

The process of adding more years onto your lease is called Lease Extension. Due to the complexity of the lease extension valuation and the overall process, it comes with its own issues. Here we will discuss how to avoid the most common issues in Lease Extension in UK. Most flat owners and a fair number of house owners in the UK are long leaseholders. This means they do not own the freehold of their homes and are in a tenant/landlord relationship with the owner. Leases on flats or houses last normally up to 99 years or 125 years from when the property is built. After this, the property goes back to the freeholder. Lease extension in the UK can be carried out if you are an eligible leaseholder. The lease agreement holds the details about the rights on the property of the leaseholder and the freeholder. This arrangement comes with its fair share of problems. For example, if the duration of your lease falls below 80 years it can significantly decrease the value of your property and make it harder for you to sell it. Fewer mortgage lenders will be willing to lend against it.

Most common issues in lease extension

Lease extension in UK can be a daunting task and comes at a cost. You may use the lease extension calculator to find out the costs but the process of lease extension valuation calls for complex calculations considering the length of the lease, ground rent, value of the property when it is extended and various other factors. After the freeholder’s and the leaseholder’s surveyors have done their valuation it comes down to negotiations between the freeholder and the leaseholder. The Lease Extension Valuation calculator in UK can also get you an estimate of the lease extension costs. All this turns into a rather tedious process and takes an enormous amount of time. It is best to hire a solicitor to carry out the processes due to the legal documentation involved.

Issues with Informal Lease Extension

Keep in mind that current laws require the leaseholder to pay everything including the expenses of the solicitor and surveyors of both the leaseholder and the freeholder’s and obviously the premium. This is why it is sometimes tempting to skip the statutory process and strike an informal negotiation with the freeholder. This process can be faster and save expenses related to the freeholder’s surveyor. 

But it is important to note that taking the statutory route can make your ground rent negligible. On the other hand, making an informal lease extension runs the risk of increasing it. Making an informal lease extension also deprives you of the protection and security provided by the lease extension legislation. The freeholder may set the terms of the lease to his own liking, which may include increasing the ground rent. 

There is also the possibility that the freeholder may just extend the lease back up to 90 years or 99 years instead of giving you an additional 90 years. This means either you or a new owner may have to go through the entire lease extension process again.

When to extend a lease

If you are trying to extend a lease that has fallen below 80 years, it may burn a hole in your pocket because lease extensions get much more expensive after that period. So every year that you wait for your lease extension, the more expensive it gets. When it comes to selling your house, any new buyer will find it hard to be accepted for a mortgage when the duration of your lease has fallen below this level. So the number of years left on your lease is critical for selling or remortgaging your property. 

As per The 1993 Leasehold Reform Act, if you are a flat owner, you are entitled to a lease extension on your flat after you have owned the property for at least two years. You possess the right to extend the lease by 90 years and reduce the ground rent to zero. But if you own a house you only gain an additional 50 years upon extending the lease which makes buying the freehold a better option.

Issues with service charges

Services charges are the amount that the landlord charges from the leaseholders in return for providing maintenance and repairs to the property. The terms and conditions for these are laid out in the lease agreement. Service charges may include the cost of services like general maintenance, cleaning of shared areas, repairs, building insurance etc. This is one of the main areas where disputes are expected to occur between the leaseholder and the freeholder.

The service charges could either be fixed or set on a variable basis. Fixed charges are where the leaseholder is required to pay a fixed amount irrespective of the actual costs to the freeholder. The fixed charge is now usually a part of older leases because as costs increased due to inflation, the freeholders now prefer to charge based on the actual cost of the services to make sure they recover their costs every year. These charges may change from time to time and are called variable service charges.

Service charges may fluctuate but the freeholder is allowed to recover only a reasonable amount from the leaseholder and if at any point you find the freeholder being unreasonable with the amount he is charging you have the right to apply to the tribunal to challenge these service charges.

It is a good idea to find out what the current and future service charges are going to be for a leasehold flat that you are about to buy.

Preparing the Tenant’s notice

The process for a lease extension starts with the valuation and then to service of the tenant’s notice. Note that from the date of receipt of the notice by the landlord you are liable for costs incurred by the landlord concerning your lease extension. So make sure that there are no errors in your notice and that it is up to the mark and accurate. If the tenant’s notice is found incomplete, it becomes invalid and the landlord has the right to reject it. You may apply to the County Court to get this corrected but this will cost you additional money so it is best to avoid that from happening. 

It is recommended to register your notice with the Land Registry because, in the event where the landlord sells the freehold to another, the lease extension procedure can continue as though the new owner had received the original notice. 

It is best to instruct a solicitor to prepare the notice and serve it so you can avoid any mistakes which may lead to legal issues arising from it.

If you are looking for help with Lease Extension is Slough we are happy to help. Our team of chartered surveyors can help you successfully negotiate your lease extensions or enfranchisement. Contact us for a consultation today.

Valuation for buying the freehold of a leasehold house in the UK

At some point in time, you must have considered buying the freehold of your property. The house was originally sold to you on a leasehold basis. If you buy your freehold you get more control of your property. You gain more freedom in deciding what you want to do with the property and, if alterations are in your mind, how much you want to spend on them. Sometimes when you’re a leaseholder of a property, the ground rent and service charges that you pay to your freeholder can get inflated to exorbitant proportions. You could end up paying unreasonably high ground rent to the freeholder.

It is not only flats that have historically been sold as leasehold, some houses (new and old) have also been sold on a leasehold basis. Multiple limitations and unfair contract clauses with the freeholder can even impair you from being able to sell your property easily.

Under such circumstances, it is perfectly justified to buy the freehold of your property. You would certainly enjoy the freedom.

Check your eligibility

The Leasehold Reform Act 1967 (the 1967 act) gives leaseholders the right to buy the freehold of the property. The process of valuation of buying the freehold of a leasehold house in the UK is also known as ‘Enfranchisement’ or ‘Freehold Enfranchisement’ where the leaseholders themselves become the freeholders of the property. However, there are a few requirements you need to meet for being eligible to buy the freehold of your leasehold house.

Valuation for buying the freehold of a leasehold house

Once you have checked your eligibility you need to calculate the price for buying the freehold of the property. Now, this price depends on several different factors and since the rules for calculating the price have changed through various amendments made to the 1967 act, it is quite complicated to calculate the price by yourself. It is recommended to get professional help from a surveyor to get a fair estimate of what you should be paying for the freehold.

Methods of Valuation

There are two different methods of valuing the house under the 1967 act known as ‘Original Valuation’ and ‘Special Valuation’ you can also use a freehold calculator for houses. Under relevant sections of the 1967 act, these are mentioned as

Section 9 (1) – the house will be valued based on the original value of the site known as the Original Valuation basis

Section 9 (1A), (1C) – the house will be valued on the Special Valuation Basis which includes a part of the marriage value.

Which of the above two valuation methods is applicable on your property depends on the qualification criteria and you or the landlord have no say in it.

The house will be valued on the Original Valuation basis if under Section 9 (1) of the 1967 act if the house meets the value limits and the lease qualifies the original low-rent test. Otherwise, in all other cases, the property will be valued according to the Special Valuation Basis, including cases where the lease has been extended under Section 14 of the 1967 act.

To get a reasonable idea of the prices for buying the freehold of a leasehold you can also visit our freehold of a leasehold house calculator.

After the Valuation

When the valuation is carried out or after using a freehold calculator for a house, irrespective of the method used, the price for the freehold is valued as being sold in an open market to eliminate any biasing towards either party. The motive of the 1967 act is to maintain fair trade between the leaseholder and the freeholder and provide adequate compensation to the freeholder for the loss of their property. The act does not aim to help the freeholder drive a bargain in his favor. The property is valued according to the open market price to ensure the freehold is transferred at a fair price to the leaseholder. Using the Special Valuation method does drive up the cost of the freehold when compared to the Original Valuation basis, so it is better to work out the details beforehand.

After the valuation, you may open up a dialogue with the current freeholder for negotiating the prices. If both parties settle on a price, the documentation may be completed. However, in cases where a settlement cannot be reached, the First-Tier Tribunal can be involved. The Tribunal acts as an unbiased third party and its role is not to rule in either the leaseholder or the freeholder’s favor. It makes an independent decision so the prices decided by the tribunal may not reflect what you or the freeholder may have decided.

You as a leaseholder have to start the process by issuing a formal notice of claim to the freeholder. It is important to seek professional advice from a valuation surveyor with good knowledge of the market so you know what costs you are going to incur before you initiate the process.

If you are looking for a lease extension in Slough, UK contact us for any kind of assistance. Our team of chartered surveyors can help you successfully negotiate your lease extensions or enfranchisement. Give us a call for a consultation today.

What is Collective Enfranchisement | An Advanced Guide

What is Collective Enfranchisement?

Leaseholders will own the freehold of the entire building which is why the term ‘collective’ is used. However, this is a complicated and lengthy process so it is advisable to instruct a Collective Enfranchisement Solicitor to do it for you.

It is also advised to get Collective Enfranchisement Valuation done from a surveyor to get an idea of the best and the worst amount that can be offered in the Initial Notice.

The best way to purchase a freehold by a group of participants is via a company set up for this purpose and all participating leaseholders will be members of this.

Why should you own a freehold?

Owning a freehold of your building individually or among a group of residents would mean you have more control over your own building and you will partly legally own the ground and the structure of the flat which can allow you to waive off the ground rent. Also, any lease extensions of the participating flats would be agreed upon between the participants at no extra cost.

If you want to modify your flat in any way or undertake an extension on your flat, a group of residents who own the freehold can look at this more approvingly than an external freeholder.

Additionally, you and your joint owners will gain the right to employ any property management company to take care of the maintenance and cleaning of communal areas, which would not have been possible in the case of an external freeholder.

Who and what qualifies for a Collective Enfranchisement?

Before the process is carried out, the building and the participating tenants must qualify for the Collective Enfranchisement.

Qualifying criteria for the building:

  • The building must contain at least two flats
  • It must be a self-contained building or be a part of a building with independent services to that part
    At least two-thirds of the flats must be owned by qualifying tenants (whose leases have more than 21 years remaining)
  • Not more than 25% of the internal floor area is being used for non-residential purposes, for example, shops or offices. Garages and parking spaces will be classified as residential areas

Qualifying criteria for leaseholder:

  • The leaseholder must have a lease which is for a period longer than 21 years
  • The leaseholder must not own more than two flats in the building

The Procedure for Collective Enfranchisement

Once you’ve checked that the building and the tenants are meeting the qualifying criteria the next step would be to form a working group and enter into a formal participation agreement which will set out the terms of the purchase and sharing of the Collective Enfranchisement Costs or premium between participating members.

Due to the complex legal procedure, it is recommended to join together and instruct a Collective Enfranchisement solicitor and surveyor to act for you. The surveyor will be able to perform a better valuation of the property and advise the amount to be offered in the Initial Notice.

The solicitor will usually advise you to set up a company for the purpose and all the participating leaseholders will then be members of this company. This will also be the Nominee purchaser who will be mentioned in the Initial Notice.

Once the surveyor has calculated the Collective Enfranchisement Cost the Initial Notice may be served, stating the name of the freeholders, the Nominee purchaser, and the premium you’re willing to pay. The freeholder then has a two-month window to come back and serve a counter-notice saying if they accept the request or not and put forward their terms and conditions if any.

If the freeholder disputes the premium the parties have a further six months to negotiate. If an agreement cannot be reached within this period then the matter can be taken to the Leasehold Valuation Tribunal after that.

What is Collective Enfranchisement? An advanced guide

Collective Enfranchisement Costs

It is highly recommended to get a valuation of the property done by a Collective Enfranchisement Surveyor before proceeding with the legal formalities so the leaseholders can have an idea of the premium.

Though an exact value of the settlement figure is not really possible to predict, the surveyor should still be able to provide a ‘best and worst’ figure from the leaseholders’ perspective.

Also, note that the leaseholders will be responsible for their own costs as well as the freeholder’s surveyors and legal costs. If the matter gets referred to the Tribunal, each party will be responsible for their own expenses incurred during the Tribunal proceeding

How To Negotiate Lease Extension | Trick Revealed

If you’re looking for the tips about how to negotiate during your flat or home lease extension, you’re at the right place. Leasehold Valuation will not only guide you to lease extension but also provide you with a Leasehold Valuation Calculator Online and will also provide you with a complete valuation report. For more information visit our website:

How To Negotiate Lease Extension | Trick Revealed

How To Negotiate Lease Extension | Trick Revealed

So, you’ve finally found a place you’re comfortable with. The neighborhood is good, no leaking pipes and no creepy noise are coming from the walls at night, and just when you thought it couldn’t get any better than this, you realize that your next rent review is only around the corner, potentially threatening your idea of settling down for a bit. Now that will make you think about how to negotiate a Lease Extension so you can still retain your property while spending less on the cost of a  Lease Extension.

But don’t worry. Not everything has to be sad and gloomy. At LeaseholdValuations.com we hold your hand through the complicated lease extension maze and keep you up to date along the way, making the whole process much less stressful and run smoothly.

If you don’t know how much does it cost to extend a lease, there are various ways you can find that out, which we will discuss further.

When do you negotiate?

There are two ways you can approach this.

  • You could take the traditional approach where the leaseholder serves the Section 42 Tenant Notice, which is followed by the Section 45 Counter Notice from the freeholder where they usually decline the amount suggested and put forward their premium. Negotiations happening at the Section 45 Notice stage involve solicitors, surveyors, and additional expenses that they bring with them.
  • You could choose the alternate method where negotiations happen before the leaseholder serves the Section 42 Notice. In this case you’re in direct contact with the freeholder or the management company, you can directly write to them stating your intentions of extending the lease and see if they’re open for negotiation. This saves costs that you would normally pay solicitors or surveyors at the Section 42 stage.

At this point, they would either agree to your terms or present you with their own offer, which you can compare with our online valuation calculator. If they end up ignoring you, you still have the option of taking the traditional approach and serving them the Section 42 Notice.

You may serve your own Section 42 Notice, but it is a good idea to instruct a solicitor to do it for you because serving a Section 42 Notice is critical, and any errors can allow the landlord to apply to the court to have it dismissed. 

RICS Valuation

Get an RICS Lease Extension Valuation before serving the Section 42 Notice because specialist RICS surveyors can perform a precise valuation of the property and give you a good estimate of how much you should be willing to offer the freeholder to extend the lease while staying in the confines of the Leasehold Reform Act. 

Using an online Lease Extension Calculator

There are ways you can calculate your premium online using an online Lease Extension Calculator, which can give you a rough idea of how much the premium is going to set you back. But remember, it only gives you a rough idea because the calculator will give you an amount depending on what data you have input. The freeholder has the right to raise an argument that you are not qualified to value the property and to give any offers based on your valuation.

In circumstances where you do proceed with serving a Section 42 Notice based on a value obtained from an online calculator, the freeholder may ask you to still get the leasehold valuation performed from a qualified RICS Surveyor. This may again add cost to your budget, so proceed with caution.

Open up a dialogue as soon as you can

It is a good idea to establish direct contact with the freeholder and work out a deal that works for both of you. Start discussing your terms early on because the earlier you begin a conversation, the more time you have to convince the landlord and also find out if the landlord is amenable to a deal or not. Get in touch with them directly and try something like, “I have received an online valuation which shows that the premium should be less than you are offering. Can we discuss this and find something that we are  both happy with?” This can open up your opportunity to discuss your terms with the landlord.

Establishing contact with the freeholder before serving the Section 42 Notice will open up a discussion and will give the freeholder an idea of the kind of premium that you have in mind. Depending on their response, you can judge whether they are willing to bend or not. This can help you further down the line when finalising the deal.

This might not help if the freeholder you’re dealing with is a large company because they usually only respond to formal notices to extend the lease.

Serving a Section 42 Notice

Based on how your pre-section 42 notice negotiation goes with your freeholder, you may now ask your solicitor to serve a formal Section 42 Notice for a lease extension. However, keep the following points in mind before including an amount in the offer.

a) Don’t offer too low: If you offer an impractically low amount, the freeholder may outright reject your offer and claim that your offer is invalid due to it not being “bonafide” or “realistic” So, choose an amount that’s reasonable, and that gives some room for a discussion

b) Don’t offer too high: Obviously, the freeholder is looking for the highest amount possible, and by offering an amount that is too high, you’re leaving no room for negotiation. Consider this a missed opportunity to settle on a reasonable premium.

The best way to go about this is by putting forward an offer that is somewhere in the middle of the lowest and the highest premium received from the surveyor’s valuation.

Receiving a Section 45 Counter Notice

If the freeholder accepts your offer, it’s all sorted. But if they don’t accept the offer, they will propose a revised counter-offer, which will be contained in the  Section 45 Counter-Notice. Now depending on how much different the Counter-offer is and how much you’re willing to deviate from your original offer, there are two possibilities.

If the counter-offer proposed by the freeholder is not significantly different from your original offer and is not setting you back by a huge amount, you may proceed with finalizing the deal. Also, if the difference in the amount is not worth spending extra money on your surveyor for negotiating with the freeholder, you may accept the offer and close the discussion.

If you feel the difference amount is too high, you can get your surveyor to negotiate your lease extension. The negotiation will take place between your surveyor and the freeholder’s surveyor to reach a common ground while comparing both their valuations. Remember that the hourly charges for negotiations are remarkably high, and you may end up paying more money for negotiating than the actual difference in premium. So, compare them wisely before going ahead.

So, consider your budget, what exactly you can afford, and how far you’re willing to go to turn the deal in your favor.

Contactless Lease Extension During Covid-19 Situation

Lease extensions are a daunting task even in the best of circumstances with various strict deadlines in terms of notices and counter-notices, agreement to the premium and specific terms and completion of the documentation procedures. Lease extensions made outside the statutory route may proceed a little more quickly than when carried out under the Leasehold Reform, Housing and Urban Development Act 1993, but it is a complicated process nevertheless. Considering all that, a global pandemic further increases the uncertainty to an already challenging task.

Valuations during Covid-19

Irrespective of whether you’re following the statutory route or the voluntary route for your lease extension, it is a good thing to obtain a valuation report from a lease extension specialist surveyor. This valuation report can be prepared by the surveyor either after a physical inspection or from a Desktop Valuation. Needless to mention, desktop valuations have been unaffected by the pandemic situation.

Desktop Valuation is an assessment that is conducted remotely through resources that are available online and completely eliminates the requirement for a physical inspection. It is helpful for people who are unable to arrange access to the property for the surveyor or in case there are time and budget limitations. However, it is important to note that Desktop Valuations are an open-market appraisal of the property that are derived only from information and tools from online sources and can provide an estimate of the market value from a combination of information and experience since there is no physical inspection involved. On the other hand, Desktop Valuations can be completed quickly without the hassle of arranging access to the property and cutting down the time required for the physical survey.

But lately, the housing market has been unlocked with strict government guidelines, which means physical inspections can be carried out as long as everyone follows strict measures to ensure safety, such as following social distancing and good hygiene measures. A physical survey is an advisable option, provided the inspection can be carried out safely with all the protocols in place and provided you’re not self-isolating.

However, if you prefer not to risk somebody being in your property or are self-isolating then you can always opt for a desktop valuation, which can be just as accurate as a physical inspection, as under the law there are certain things the valuer must assume about the internal condition of the property and so does not necessarily need to physically inspect your property.

What should you expect during your valuation?

In order to keep up with the latest government guidelines concerning the Covid-19 situation, a few extra points need to be taken care of by the surveyor as well as the occupants to permit a safe and smooth inspection.

  • The surveyor will ensure that nothing has been changed since the appointment was booked
  • If anyone is self-isolating in the household, has been diagnosed with Covid-19 or is showing any symptoms, the surveyor will not be able to carry out the inspection and it has to be booked for a later date
  • If possible, it is safer for both you and the surveyor if you’re able to leave the house during the survey. Otherwise, you may wait in the living room while the surveyor completes the inspection. If none of this is possible, please follow the surveyor’s instructions as and when they ask you to move so the inspection can be carried out easily
  • The Surveyor will start by inspection of the outside front of the house then move to the outside rear. Following that they will move on to sides, outbuildings, garages, then completing the inside of the loft, upstairs, downstairs hall, ground floor WC and finally the living room
  • All lights must be on to reduce contact with switches
  • All internal doors, loft hatches as well as garage doors must be kept open to prevent physical contact with doors and handles
  • Social distancing measures of at least 2 metres must be maintained and any kind of physical contact should be avoided. No handshakes must be exchanged and the surveyors must be equipped with the appropriate PPE
  • Other government guidelines specific to your part of the country must also be followed

The damage inflicted by Covid-19 has been massive and is yet to be evaluated, but at the same time, it is important now, more than ever, to plan ahead and ensure that our financial positions are such that we can be prepared for such unforeseen situations in the future.

For the safety of everyone, Leasehold Valuations must be carried out with all protocols and frequent hand washing and good hygiene must be encouraged.

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