Lease extension- 66 yrs. unexpired- precedent valuation?

[Jueyclaire]

Hi all,

Correspondence has been ongoing with our freeholder since November.

They wanted £25k, now reduced to £23k and won't budge.

We have now found out that 2 maisonettes next door (same freeholder) extended their leases last year for £16k (their leases were at 62 yrs - taken back to 99) ours is at 66 yrs, wanting to extend to 99.

What bearing should the 2 lease extensions last year have?

We have written to them again to ask how they can possibly justify a 50% increase when our lease is longer to start with.
They have already sent copies of letters from the surveyor they used who states 'in excess of 23k'. This is the same surveyor used in the two cases last year as when I spoke to him he was familiar with the address.

As is usually the case, we are trying sell and this is doing our heads in.

Do the 2 extensions last year set a precedent that they can't wriggle out of ???

[jeffrey]

Have you served Notice under s.42 of 1993 Act? This entitles you:
a. to add 90 yrs. to existing term; and
b. to delete ground rent.

That must be a better deak than what's on offer.

[sgclacy]

What has been agreed elsewhere is irrelevant, what matters in your case is whether the formula under the Act has been correctly applied. If the cases referred to had gone before the LVT then it may well help on issues such as relativity

Unfortunately you do not advise as to the flats value, but if the ground rent is very low ie less than £50.00 the premium for a 90 year extension would be around 9% of the value of the flat if it had a long lease and a negligible ground rent.

I suspect the current difficulties in the housing market have made addressing the problem of shortish leases more necessary and I suspect the Landlord is seeking to abuse his position. I would in your case ask them for the basis of the calculation i.e. what value have they put on your flat and what relativity is being applied to a lease of 66 years (at 66 years relativity should be around 85% to 88%)

The other variables ie deferment rate should be 5% (following Cadogan and Sportelli) and capitalisation rate should be around 7% (but if the rent is very low - almost any rate would be acceptable as it affects the premium by just a few pounds)

[Jueyclaire]

Their 'surveyor' values at £250k with new lease.
Ground rent currently £70pa, doubling at 50 and 75yrs expired

Exactly the same as the 2 places next door - yet makes our extension 50% more.:mad:
No, we haven't served notice under s.42 - just going for back to 99yrs.

I had enquired here back a few months ago - I think you made the figure in the region of £33k ! So LVT doesn't look like a good route.

...all so depressing

[Jueyclaire]

Right then,

I've been reviewing our correspondence on all this.

Their surveyor values at 250k with new lease and 212,500 with current lease.(66yrs)

I presume it's the size of this gap that determines the marriage value?(along with certain percentages and a flux capacitor;))
1. Does this gap seem a little large to anyone else? - £37,500 !!!!

2. As surveyors use comparables to determine values, why aren't the 2 leases issued next door by the same company relevent ?

I will get the cost of this lease down, I will.