Residential Lease Extension Case Studies
With 96 years remaining on their lease our client, the lessee, appointed us to provide a valuation report upon which they could apply to their freeholder Cheltenham Borough Council to extend their lease by an additional 90 years, at a peppercorn ground rent.
The lessee recognised that all leases are depreciating assets and that for every year that passes the premium payable to extend the lease ultimately increases. With 96 years remaining, the cost to achieve a 186 year lease was negligible when compared to the enhanced capital value of their home.
With only 70 years remaining on the lease the owners of this flat were finding it increasingly difficult to sell, with the only offers received being at an unacceptably low level from cash purchasers.
Acting for the lessee, we prepared a valuation report and successfully negotiated a premium with the freeholders’ surveyor which was considerably less than that originally demanded.
The new lease, with an extended term, immediately enhanced both the value and marketability of the flat.
Having received a s.42 Notice, our Freeholder client sought our advice as to the reasonableness of the proposed premium. Acting on information provided by the freeholders’ surveyor we provided a desk top valuation of the premium and advised the client on the statutory enfranchisement process.
Bristol City Centre
Our client, a major property investment company, instructed us to provide a desk top valuation for inclusion with a lease extension Notice to their freeholder. Their solicitor had advised that they were under a statutory obligation to propose a realistic premium within their s.42 Notice.
Our client was aware from the outset that their application was likely to be rejected by the freeholder, that a negotiated settlement was unlikely and that the application would, in all likelihood, ultimately be determined by the First Tier Tribunal.
Being a reputable Limited Company that traded locally, it was therefore imperative to our clients that they could demonstrate to the Tribunal that they had acted professionally, fairly and with complete transparency from the beginning of the process.
Having received a s.42 Notice advising that the lessee wished to apply for a lease extension, our Freeholder client instructed us to value and negotiate a settlement with the lessee appointed surveyor. Following extensive negotiations we were able to secure a premium significantly higher than that originally proposed by the lessee in the s.42 Notice.
Charlton Kings, Cheltenham
Un this instance although the lessee still had 91 years unexpired on their flat, they instructed us to provide a valuation report from which they applied to their freeholder, Cheltenham Borough Council, to extend their lease by an additional 90 years and to reduce their ground rent to a peppercorn. This proactive approach enabled them to secure a 181 year lease at a low premium. The value and marketability of their flat was also significantly enhanced.
Dewell Mews, Swindon
Our property investor client instructed us to provide valuation reports on her portfolio in order to determine the premiums to be included within the s.42 Notices. She was conscious that the Courts had upheld the principle that proposed premiums must be reasonable and therefore concluded that the inclusion of a specialist valuation report would assist in the process.
Our client was looking to market their flat which was located within a prestigious building. Their estate agent advised that the low term remaining on the lease would significantly reduce the value achievable and would deter potential purchasers. With only 56 years remaining on the lease prompt action was imperative. The freeholder had provided an indication of the premium and terms he would accept however following our inspection and valuation, a negotiated settlement was reached at far more favourable terms.
Our client owned a long leasehold interest in a flat where the freehold interest was retained by Cheltenham Borough Council. Although the lease had an unexpired term of 90 years, the lessee was keen to extend his lease to 180 years and to reduce his ground rent to a peppercorn, as was his statutory entitlement.
By taking such a proactive approach he not only enhanced the value of his home but avoided any additional payment to the freeholder, known as marriage value, simply by completing the lease extension before it fell below 80 years.
With our assistance the client ultimately ended up with an extended lease, a ground rent reduced to nil for the remaining term and an enhanced capital value, all for payment of a low premium.
Following a change in family circumstances our lessee client looked to market their long leasehold interest in an investment property. Unfortunately the estate agent soon advised that the short length of term unexpired was both unacceptable to mortgage lenders and unappealing to the market. The only offers received were from cash investors and were substantially below that for which the flat would otherwise have sold.
With our assistance the client was able to extend the lease at an affordable cost and ultimately increase both the market value and market appeal of this otherwise attractive property.