Crown Estate Lease extension

[AlexE]

Hello all, I have just stumbled across this very very informative forum while looking for info on this:

I have a flat in a block owned by the Crown Estate and the lease is currently down to 53 years, the ground rent is £37.50 a quarter and the flat is currently worth about £750k.

I'm just wondering how they calculate the cost of the extension, I have been told that being Crown land they are not bound by any of the other rules when it comes to leases, but generally are fair and abide by them. What sort of price should an extension be? I believe its either 99 years or 120, the managing agents have been dragging their heels on the matter and on my requests for info.

Many thanks!

Alex

[Gordon999]

You are entitled to apply for a statutuory 90 year extension at peppercorn ground rent and the method of calculation of cost is given in a publication on "lease extension" from www.lease-advice.org
Since the cost will be quite substantial, you ought to get a specialist surveyor to calculate the cost and enter negotiation with the freeholder.

[jeffrey]

Crown Estates will usually consent to lessee's operating statutory enfranchisement/extension rules as if these were binding.

[AlexE]

Many thanks,

Going through my papers I have come across a letter from the managing agents regarding the lease extensions and a couple of things have struck me as odd with the fees, which seem to be excessive to say the least:

£200 + VAT application fee

and: "In addition to paying the premium as set out in the Act, you will also be liable for all reasonable fees. The Crown Estate's have indicated that their legal fees should be circa £1500 plus VAT and the Crown Estate's surveyor's fees approximately £1500 plus VAT, however this is likely to increase on the more valuable properties"....."You will also be liable for your own solicitor's costs"

"Our valuation and negotiation fee would be based on 0.1% of the agreed value of the flat on the extended lease, with a further incentive fee calculated at 5% of the saving achieved from the premium quoted by the freeholders exclusive of VAT"


What this adds up to is somewhere around £10k in fees alone! This seems like a huge amount in fees to me, but the part which I am most concerned about is that I have to pay their surveyor. So whilst their interest is in making my flat seem as valuable as possible resulting in a larger charge, mine is in making it as low as possible, so I'm essentially expected to pay someone that will increase my charge? Conflict of interest?

Why am I paying their fees at all? Perhaps the managing agents fees, but I could negotiate without them after all?

[jeffrey]

Any lessee-originated statutory transaction (collective enfranchisement, individual lease extension, etc.) or a non-statutory equivalent will involve the lessee paying the lessor's legal fees/VAT/disbursements (and at least a one-off lessor's valuation fee), so the principle is consistent even if the amounts quoted to you sound disproportionate.

[TomMerralls]

Still, the fees do seem a bit excessive in light of my dealings with The Crown before. Only way around this is to serve a formal Notice on the Crown. This way you can dispute the fees, particularly the Valuation fee, which should be no more than half of what they have quoted.

I am also assuming you have owned your flat for at least 2 years.

[jeffrey]

Plus there is no statutory right for V to recharge negotiating fees- merely one valuation fee- to P.
The third and fifth paragraphs of post #4 are therefore unenforceable, if P uses the statutory route.

[AlexE]

Still, the fees do seem a bit excessive in light of my dealings with The Crown before. Only way around this is to serve a formal Notice on the Crown. This way you can dispute the fees, particularly the Valuation fee, which should be no more than half of what they have quoted.

I am also assuming you have owned your flat for at least 2 years.

Yes, I have owned the flat for more then 2 years, what does serving a notice of value on the Crown involve? -It probably isn't worth doing something like that for "the chance" of saving £750?


Plus there is no statutory right for V to recharge negotiating fees- merely one valuation fee- to P.
The third and fifth paragraphs of post #4 are therefore unenforceable, if P uses the statutory route.

I didn't quite follow this part? I take it you mean that the 0.01% is unenforceable? but I'm assuming that's voluntary based on me asking the managing agents to negotiate on my behalf?

[jeffrey]

I didn't quite follow this part? I take it you mean that the 0.01% is unenforceable? but I'm assuming that's voluntary based on me asking the managing agents to negotiate on my behalf?
If you use statutory rights, you pay to L only:
a. the price;
b. L's solicitors' legal fees/VAT/disbursements; and
c. L's surveyor's valuation fee- nothing more.

Of course, you also pay your own solicitors and surveyors. Is that what they meant?

[TomMerralls]

Yes, I have owned the flat for more then 2 years, what does serving a notice of value on the Crown involve? -It probably isn't worth doing something like that for "the chance" of saving £750?

Total saving IMO would be around £1,500 but the cost of "getting there" may be a few hundred pounds more than if you went down the informal route of accepting the current offer. In other words, I think you could save some money by going down the formal statutory rote, but cannot guarantee this. It's the risk you would have to take in order to make a stand against their costs.