Lease Extension- lessor's legal fees payable by lessee

[jmlng]

I am looking to extend my lease for a further 90years. However, i am concerned about any additional fees that my Landlord may be legally able to charge me.

Please can anyone let me know, whether a Landlord can gain a capital payment on the grant of a new lease, and if so, what are the figures generally, or if not known, where else can I find this information.

I'd be grateful for any help or suggestions.

[Poppy]

You should negotiate a price for extending your lease with the freeholder directly. There are no general figures. Every freeholder will quote a different price for their respective property.

[jmlng]

Thanks for the reply.

I gather that a price will be agreed for the lease itself. However, I wonder whether there will be any subsequent charges laid by the landlord after the lease is granted. A sort of an added income for the Landlord.

[jmlng]

Further to my message left on 5 June, is anyone else able to assist.

Can Landlord's charge any extra for Lease Extensions by way of maybe a rent surcharge?

I know that you have to pay a premium, their reasonable disbs, surveyors fees etc but am concerned about future or hidden fees, costs.

[tenant29]

For information on lease extensions , please see publication " Residential Long Leaseholders " page 40 onwards -

http://www.odpm.gov.uk/pub/696/ResidentialLongLeaseholdersaguidetoyourrightsandre sponsibilitiesPDF1402Kb_id1151696.pdf

[jmlng]

I will have a read. Thanks for your help.

[Richard Webster]

The statutory right to a lease extension is for a 90 year extension at a peppercorn (nil) ground rent.

Sometimes Landlords offer a different deal involving perhaps a shorter or lenger lease and try to put the ground rent up in the process.

If the lump sum required is lower than it would be for the 90 year/peppercorn extension and you are going to sell the flat soon then it may be worth it because most buyers don't think about the amount of ground rent and a figure of £200-£250 per year (particularly in London) is not going to stop the average buyer going ahead - he is not going to make fine comparisons and say that he'll pay less for your flat because there is a similar one down the road where the ground rent is only £50 pa - that kind of thing doesn't happen in the real world.

Also, remember that the calculation of the amount that you would have to pay if you went all through the statutory process is complicated and depends upon variables where surveyors can differ on their views - so to get a definite decision you would have to go throught he statutory process which could cost something like £3,000 in fees - so if the Landlord wants £10,000 to extend the lease by 90 years but wants to increase the ground rent and the best advice you have about the cost of an extension 90years/peppercorn is £10,000, you have to decide whether it is really worth spending say £3,000 just to get the ground rent down to the peppercorn. This is only an example, but you may be faced with that sort of assessment to make.

Richard Webster www.rwco.co.uk (http://www.rwco.co.uk)

[jmlng]

Richard,

Thank you very much for the advice, it has proved very useful.

Regards

[Tax Accountant]

Make sure you negotiate with the landlord from the position of strength, ie you must have a professional or competent valuation for the cost of extension before you start to negotiate with the landlord. Most landlords will try on to reap you off if you are not careful. I was quoted a sum of £7,500 but after a professional valuation and a threat of taking the case to the valuation tribunal, we agreed the final figure at £1,500.

Remember that the landlord doesn't want to go to the expense and hassle of going to the tribunal any more than you. Therefore, they will wish to settle by negotiation as much as you want to. But that will not stop them from trying it on to get a higher figure from you.

A professional valuation may cost you approx £200+vat.

Ramnik

[jeffrey]

Another point about LVT:

It can make an Order about purchase price (or, if lease "premium") and about the amount of L's conveyancing costs (solicitor/surveyor) which T has to pay. However, it cannot make an Order re LVT hearing costs, no matter who:
a. started the LVT procedure; and
b. wins/loses.

Normal civil courts do have Costs jurisdiction. The LVT has this only where the party who started the action has it action dismissed on grounds of being "frivolous, vexatious, or an abuse of process"- see paragraph 10 in Schedule 12 to the 2002 Act.

This inability of the LVT might induce the parties to settle, eg if the difference between offer and counter-offer is less than the two parties' combined LVT costs.