We are specialists in this field and are aware of the complexities of the Leasehold Reform Housing and Urban Development Act 1993 (as amended).
Who we act for and where we act
We are able to act throughout the UK. We act for both landlords and tenants, but in prime central London we generally act for tenants and we have acted against most of the major estates, such as: Bedford, Cadogan, Cambridge, Church Commissioners, The Crown, Eton, Eyre, Grosvenor, Howard de Walden, John Lyon, Myron Wilson, Portman and Sloane Stanley Estates. We also often act for tenants against Freshwater.
For landlord’s we have particular expertise in suburban South London, particularly in the corridor between Wallingham, Croydon and Sutton. We also service the South Coast, in places such as Brighton, Hastings and Worthing.
Section 42 and 45 Notices
We are able to provide valuation advice on both a statutory and informal basis. An informal basis would be where no Section 42 Notice is served and an extension is normally agreed between the parties, often with a retained ground rent.
The requirement is that your interest in the flat has to be registered at the Land Registry for a period of 2 years. You are entitled to a 90-year lease extension at £nil rent (a peppercorn). If you can apply for a lease extension, you should extend your lease. Really you should do this before your lease drops below 80 years. At this length of lease there is no marriage value, so the cost is significantly less.
To start the process and to help reduce cost, before you consult either a solicitor or surveyor know:
- How long is left on your lease and the level of ground rent payable.
- Summarise the size of your flat (floor area, basic room details and type).
- Summarise its location.
- Know the name of your landlord: all surveyors and solicitors need to tell you if they are conflicted
- The purpose of your valuation: i.e. are you looking to sell?
Only once you have this information, should you ask your adviser to provide you with a quotation: be aware there are informal valuations (generally provided by an estate agent); desktop valuations (valuations undertaken without inspection); and formal valuations (a full inspection that should be accompanied with a full written report that is compliant or in accordance with the RICS guidelines).
Each type of valuation will have a different fee level, but as this is possibly the second largest transaction on the flat (or may be the largest in the case of short leases) you should consider that getting the right advice is more crucial to you than the cheapest quote for the valuation.
When choosing your advisers, you need to prioritise not just on the cost of advice alone. You should consider: 1) Knowledge and experience and 2) Areas of expertise.
The surveyor’s role is to assess the factors affecting value. A good knowledge is essential, especially of comparable sales evidence in the area. The surveyor should comment on the similarity in accommodation, lease length and condition. A report should include comment on:
- Property Location and Description
- Property Accommodation
- Property Condition and Development Potential
- Planning History and Council Tax
- Factors Affecting Value
- Property Photographs
- Schedule of Comparable Property Evidence
- Valuation Premium Schedules
The Valuation of the Lease Extension Premium
The valuation will produce a range of figures due to the valuation factors noted above.
For the purpose of negotiation, the quoting premium within the Section 42 Notice to be served on the landlord or Counter-Notice (Section 45 Notice) to be served on the tenant will invariably be the best case for the respective party. A caution for a tenant is that if you quote too low (an unrealistic figure) you may risk costs and up to a year or more delay.
Any valuation undertaken at the start of the process should provide a settlement range. This is as, at the start, the full facts and evidence cannot be known, as the opposite sides argument has not been heard.
Negotiation of a Lease Extension & Costs
As both the landlord and tenant are likely to quote their “best case” valuation, the negotiation of a lease extension premium is the most important element. A good negotiator can save or gain his client substantial sums of money. This is the reason why fees quoted for the initial valuation are not the most crucial aspect.
Important Note on Associated Costs:
In the event that a tenant exercises their right (serves a Section 42 lease extension claim) under the Leasehold Reform Housing and Development Act 1993 (as amended), the tenant will be liable for the landlord’s reasonable costs in determining the premium payable (valuation costs) and those of the landlord’s solicitor in respect of dealing with the Notice and in the event of the matter proceeding, the conveyancing costs. The tenant is liable for these whether or not the tenant proceeds (save as to the conveyancing costs).
In the event that the matter proceeds to the first-tier Tribunal, both sides bear their own costs relating to the Hearing. As with the determination of the premium, the tribunal can assess the legal and valuation costs.
Each party will also be responsible for their own costs during negotiations in most instances.
For more information please contact: Justin Bennett BSc (Hons) FRICS ACIArb