Lease Extension Valuations from Woodward Chartered Surveyors
If you are a qualifying leaseholder, you will have the right to claim an extension of your existing lease for an additional 90 years at a “peppercorn” rent (effectively rent free).
Your statutory right is contained in the Leasehold Reform Housing and Urban Development Act 1993 (as amended) and this legislation sets out the procedures which must be followed by a flat tenant to claim this right.
Here we explain briefly the procedures involved in exercising your statutory right to claim a lease extension:
Briefly, in order to compel a landlord to sell a lease extension the building must be:
- A residential structure, not a commercial building
- Outside the precinct of a cathedral
- Not owned by a charitable housing trust, National Trust or the Crown.
And the flat tenant must have:
- A lease of more than 21 years when
- Owned the lease for at least 2 years at the time of serving notice
- Not be a business or commercial tenant
Popular Lease Extension Survey Locations
What a Lease Extension Valuation by a Chartered Surveyor includes:
The valuation completed by your surveyor is not just an estimate of what the flat will sell for today, but a complex calculation that includes assumptions made by Statute and precedents made by court tribunals in previous cases.
The surveyor will arrive at a likely range of values often thought of as a “best case and worse case scenario”.
It is important to remember that the surveyor's inspection is not a survey or valuation for any other than this special purpose.
Once you have received your valuation, a Notice Of Claim can be served on the freeholder. This can be assigned with the lease when the flat is sold so that a buyer can proceed without the need to meet the 2-year qualifying period.
Costs and Finance
As you are compelling the freeholder to sell an extended lease to you, you will be responsible for your own professional fees and those of the surveyor and solicitor working for the freeholder.
If you withdraw after serving Notice, you will still be liable for all such professional fees incurred up to that point.
Your finance arrangements should, therefore, cover not only the premium for the lease extension but also professional fees.
Once the Notice has been served the freeholder is entitled to require a 10% deposit (£250 minimum) to be paid.
The “Notice of Claim” needs to be absolutely correct and is usually done by a solicitor who will gather certain information to avoid mistakes. An incorrect Notice will mean waiting another 12 months before claiming again and maybe a higher premium.
After the lessee's Notice has been served the freeholder has 2 months in which to reply with a “
Often negotiations take place between the lessee and the freeholder to avoid the necessity of applying to the Leasehold Valuation Tribunal (LVT) to force a decision on the parties.
It is generally in the parties interest to agree a negotiation as the costs of an LVT hearing are not recoverable (except in extreme circumstances) against either party.
Leasehold Valuation Tribunal
If the lessee and freeholder cannot agree on the premium or perhaps some other term, either can apply to the Leasehold Valuation Tribunal (LVT) for a determination of those outstanding terms.
This must be done no earlier than 2 months and no later than 6 months after the date of service of the
Once an agreement is reached or decided upon, the form of an extended draft lease will be negotiated between the solicitors for the lessee and freeholder. This also provides an opportunity to correct any flaws in the original lease.
If you have a mortgage on the property your lender will need to consent and will require a deed of substitute security to be put in place. Your solicitor will handle these matters.
This Fact Sheet is intended as a brief guide only and does not seek to summarise all of the provisions of the legislation which is complex. It should not be relied upon by you and you should take specific professional advice relating to the particular circumstances of your own case.
GLOSSARY of terms used in a Lease Extension Valuation :
The one-off sum paid in consideration of the lease extension.
The person who holds the lease, i.e., the flat owner. Sometimes referred to as the Tenant or Leaseholder.
The person or body to whom the property would return if the lease reached the end of the term. Sometimes referred to as the Landlord or the Lessor.
Rent / Ground Rent
The sum payable, usually annually as part of a lease.
Used to describe a rent that is so small it is not collected.
Section 42 Notice
The notice a lessee serves on a freeholder.
The number of years of the lease.
The investment value of the unexpired term of the lease.
The increase in the value of the lease by virtue of obtaining a longer lease.