Lease Extension Valuation

Lease Extension Notting Hill Valuation

The valuation of lease extensions can be a somewhat daunting subject, especially for leasehold properties in Notting Hill. For these kinds of scenarios, the expertise of lease extension surveyors is invaluable.

Lease extension allows a leaseholder to lengthen the term of the lease. This is a process authorized by the 1993 Leasehold Reform Act, which enables a leaseholder on a flat to extend the lease for 90 years and a house leaseholder for 50 years. This right is particularly crucial as the lease approaches 80 years, at which point the cost of extending the lease can significantly increase.

The freeholder must be compensated before a leasehold can be extended, and this sum is usually determined by surveying professionals. They work from the RICS Red Book, which sets out the rules and procedures for surveyors to follow in carrying out valuations in a consistent way. Following these rules and procedures is necessary to ensure that any discrepancy in the figures produced by different surveying firms can not be challenged in court. The sum we arrive at is therefore a negotiated sum, and the RICS procedures ensure that the negotiation takes place on a sound basis. If you are extending the lease in Notting Hill, the following sections may be relevant to you because they explain the process in a bit of detail.

Process of Extending a Lease in Notting Hill

The valuation that the surveyor and the leaseholder’s solicitor arrive at for the lease extension is used to set forth an offer to the freeholder that is based on the leaseholder’s desired amount.

Of course, many factors play into the above, and the two professionals (the surveyor and the solicitor) try to negotiate along the leaseholder’s lines in arriving at what they consider a good deal for the leaseholder. If the offer being made is disputed, a lease extension surveyor can represent you at a Tribunal or County Court, ensuring that your rights are given a fair and full hearing.

In essence, a lease extension surveyor in Notting Hill is ordinarily an expert regulated by the Royal Institution of Chartered Surveyors (RICS) or CIOB/RPSA who specializes in extending the leases of leasehold properties, whether they are residential flats or commercial buildings. The role is one that entails considerable amounts of paperwork and communication. Surveyors prepare what is called a lease extension pack. They review the legal agreement and liaise with legal experts. They also coordinate with the leasehold funders who might need to be involved if the property is being re-mortgaged (these are important conversations to have because sometimes a loan is secured on a property wherein the lease is in the process of being extended).

Valuer for Notting Hill Lease Extensions

In Notting Hill, a lease extension surveyor is usually a member of the Royal Institution of Chartered Surveyors or other accreditation body who specializes in the nuances of extending a lease on a leasehold property. This highly trained and knowledgeable professional carries out the necessary valuations, negotiates with the freeholder, and serves the essential legal notices, all of which are required to legally extend a lease.

The lease extension surveyor also acts as representative at tribunal should that process become necessary. Given the value of leasehold property, the lease extension surveyor is a key player in the process.

What is a Lease Extension Valuation?

A Lease Extension Valuation looks at the market value of the property and makes some assumptions based on statutes and decisions made by courts and tribunals. In essence, these reports have two possible outcomes. One outcome is a premium that would be paid to the freeholder to extend the lease, and the report also includes a valuation which has both a best and worst-case scenario for the leaseholder and freeholder. The premium for the lease extension is based on several factors:

the loss of ground rent to the freeholder
marriage value
the deferment of the reversion
some other compensation.

The valuers who make these assessments are usually registered with RICS and are thus able to deliver unbiased reports going either way.

What are the Benefits of a Lease Extension Valuation in Notting Hill, London, Bristol, Manchester & Cardiff

If you are a leaseholder, you can use a Lease Extension Valuation report to help you with several things concerning your lease:

budget for all the costs associated with the lease extension;
decide if extending the lease is feasible for you;
negotiate renewed and extended terms with your freeholder;
resolve disputes with your freeholders;

If you are the freeholder, a Lease Extension Valuation report can help you in a couple of ways:

understand the overall value of the freehold,
make negotiations easier
deal with any possible disputes
help protect investments

When to Extend My Lease?

If a lease has 100 years or more remaining, extending it does not usually bring any financial benefits to the leaseholder. If it has fewer than 80 years left, the situation can be quite different: a leaseholder can easily pay tens of thousands of pounds to extend it, but the potential profit from the flat can make it worthwhile. Once a freeholder’s leaseholder has owned the flat for 2 years, the freeholder must extend the lease by 90 years. If your lease has 83 years or fewer remaining, it’s definitely time to think about extending it.

What is Section 42 Notice?

A Section 42 Notice is a legal document one serves when one wishes to extend a lease. It is part of UK law, specifically the Leasehold Reform, Housing, and Urban Development Act of 1993. Under this Act, a leaseholder may request an extension of the lease. The extension, if granted, will add an additional 90 years to the current lease.

In addition, the ground rent contained in the current lease can be reduced to zero for the new, extended lease. The leaseholder may serve the Section 42 Notice only if he or she has qualified and is prepared to carry out certain actions.

Once the freeholder receives the notice, they are required by law to respond within a certain time frame. The response they send back is known as a Section 45 Notice. The two parties—the freeholder and the leaseholder—will be referring to different terms in the conversation they are having about the extension. The Section 45 Notice is either an agreement to extend the lease on the terms proposed by the leaseholder or an outright disagreement with the leaseholder’s proposals.

Serving a Section 42 Notice is a legal process, so it is strongly recommended that leaseholders obtain independent legal advice in carrying out this process. In following this legal process, there are some costs involved, including professional fees and a deposit to the landlord.

What Steps are involved in Extending My Lease?

Lease extension in the UK is not straightforward. Nevertheless, we can outline the basic steps you need to take to extend your lease smoothly:

Establish eligibility: you have to establish if you are entitled to an extension. You can only apply if you have owned the lease for at least the last two years and if the original lease had a term of at least 21 years.
Professional assistance: you must consult either a solicitor or a chartered surveyor. You need their help to get through the legal and the financial parts of the extension process.
Appraising the Lease: hire a chartered surveyor to appraise the lease. This will give you a good idea of what it will cost to extend the lease.
Issuing a Section 42 Notice: with the aid of your solicitor, prepare and serve a Section 42 Notice on your landlord. This is a standard legal document required for extending a lease. It sets out your intention to extend the lease and the basic terms on which you propose to do so. When preparing this document, be sure to follow the instructions to the letter.
Notice in Reply from the Landlord: the landlord has 2 months at most in which to serve a notice in reply. This notice states either the landlord’s acceptance of the lease extension as proposed or sets forth different terms for the lease extension. When a different set of terms is proposed, it is your duty, as the lessee, to negotiate the terms.
Negotiating: if the freeholder offers different terms, you must negotiate those terms. As necessary, you should enlist the help of your solicitor and surveyor in this task.
Tribunal: should you and the freeholder not find common terms within 6 months of the counter-notice, you may apply to the First-tier Tribunal (Property Chamber). After the new lease has been drafted, it is then properly signed and executed.
Registration of the lease: the Land Registry must be given the new document so that it can be registered.

Remember that this procedure can consume a great deal of time and has significant legal and monetary repercussions. It is wise to confer with a professional before embarking on this journey so that you understand what the undertaking involves and what is reasonable to expect as an outcome.

Who requires a Building Survey?

RICS’s industry guidelines suggest building surveys for properties that are large, very old, in some disrepair, or have unusual features. Building surveys are also recommended if you plan to do any significant renovations or extensions.

Do You need a Home Buyer Survey?

If you’re purchasing a relatively modern home that’s in decent shape and built to ordinary standards, then a Home Buyer Survey is an acceptable choice. If you want the assurance of an inspection and report that are pretty much guaranteed to turn up any issues that might be hidden or just hard to see, then you should go for a Full Building Survey instead.

Home Buyer Survey v Full Building Survey

The Full Building Survey is more detailed; it is more specifically tailored to the property your surveyor would be inspecting. It also comes with more advice on the visible defects found and on the potential hidden defects that they suspect may be present. Your surveyor will illustrate reports with photographs so that you can clearly see what has been discovered. Both the Home Buyer and Full Building Surveys describe the repairs needed, the order in which the repairs should be done, and the kind of “maintenance measures” that will be required to keep the property in good condition.

Is a Valuation included in a Home Survey?

A HomeBuyer Report does include a market valuation as well as reinstatement costs. However, a Full Building Survey does not. The main reason for the differences in what is and isn’t included in the two types of reports is how focused the reports are on the condition of the property. The Full Building Survey is the most in-depth and comprehensive survey of a property that you can have done.

Contact a Notting Hill Surveyor

When extending leasehold properties in Notting Hill, Lease Extension Surveyors play a key role. They interpret the existing lease; ascertain the cost of the extension; and provide a market valuation. For this work, they rely on calculators, but the calculations they make are extremely important because, when the unexpired term of the lease falls below 80 years, the price to extend starts to rise substantially.

To obtain a statutory lease extension or to extend a lease by 90 years, clients need both a lawyer and a surveyor. The lawyer gives notice to the landlord that the tenants would like to extend the lease. If the landlord does not agree to the extension, the tenants’ lawyer may have to apply to the county court for an order extending the lease.

Our panel of Notting Hill chartered surveyors has a wealth of experience in providing an effective and professional lease extension service. Their aim is to achieve an extension of your lease at a price that is sensible and reasonable. They are more than happy to give you a free consultation to discuss your matter in greater detail.