Lease Extension Valuation Surveyors – are specialist valuers a necessity or a luxury?
Anyone wanting to extend the leasehold on their flat under the provisions of Leasehold Reform, Housing and Urban Development Act 1993 (as amended) really needs valuation advice from an experienced and specialist lease extension surveyor.
The main reason is that, even before your initial notice of claim is served on the landlord to start the lease extension process, it needs to contain a realistic level of premium payable to the landlord for the lease extension under the terms of the Act. If the premium offered in the notice is completely unrealistic, the notice is simply invalid.
Making sure that the premium is realistic is crucial and requires the surveyor to have specialist knowledge and experience of leasehold extension.
Looking for a specialist lease extension surveyor? We can help you instruct the right surveyor from our national network of specialists as part of our one-stop shop service. Call us now on FREEPHONE 0800 1404544
What kind of surveyor do I need?
Qualifications? Statistically it is usually chartered surveyors who carry out the lion’s share of lease extension valuation work in the UK. The chartered surveyor you employ will have achieved a high level of professional qualifications and will usually be a member of their premier professional organisation, the Royal Institute of Chartered Surveyors.
Any local knowledge?
The surveyor who will probably produce the most reliable lease extension valuation may also be the one who is reasonably local to you and has an in-depth professional knowledge of the local housing market and any developments that might affect the value of your property in the near future.
Having said that, many areas where lease extensions aren’t that common don’t have local surveyors with enough experience. That specialist experience is essential – local knowledge is a bonus.
What will my lease extension surveyor do?
Leasehold extensions are a very niche area with strict rules on deadlines and interpretation and the fact is that even the vast majority of surveyors, let alone lessees, rarely come across lease extensions and therefore cannot accurately advise on how to value them.
In most cases, leaseholders or potential leaseholders cannot know what is a reasonable amount to pay their landlord for an extended lease or how much to discount from an offer on a property with a short lease.
A specialist lease extension surveyor will:
• advise on the offer to be made to the landlord in the leaseholder’s Notice
• advise on the response to the landlord’s Counter-Notice
• carry out a valuation to assess the lease extension premium
• conduct negotiations with the landlord on behalf of the leaseholder
• provide expert evidence at the First-Tier Property Tribunal (which was previously known as the Leasehold Valuation Tribunal or LVT)
Calculating the premium for the lease extension – a job for a professional
The landlord/freeholder’s interest in the property will be worth less after the new lease is granted that it was before – due to the loss of ground rent income and the loss of the right to get the flat back when the original lease expires [which is called the reversionary interest]. This loss of value suffered by the freeholder is called, in the words of the Act, ‘the diminution in value’.
The surveyor will consider this diminution of value, together with the landlord’s share of the marriage value, plus any compensation payable, when calculating the premium. This is complicated work and there is no alternative to doing this as they are the factors laid down by the Act for calculating that premium.
If the existing lease has eighty or more years to run the marriage value (the marrying of the freehold and leasehold interests) will be zero, but below eighty years to run and the landlord will be entitled, under the legislation, to 50% of whatever the marriage value is calculated to be.
Click here to read more about lease extension marriage value – and the government plan to abolish it
A further allowance may also be made for what is called “hope value”. This means if there is some sort of potential further value attached to the freehold (say if there is a large garden and the possibility of building a second property, or extending the current property), the freehold could attract a greater value – and therefore the premium payable to the freeholder might increase.
A depth of experience of comparable lease extensions, the state of the local open property market and a familiarity with valuation tribunal decisions, all feed into the basic maths when the surveyor calculates the value of the premium and negotiates it with the landlord/freeholder.
My lease extension surveyor – desktop valuation or physical inspection?
Whilst the majority of specialist surveyors prefer to carry out an actual physical inspection of the property, is that really necessary?
Well, the alternative is what is known as a desktop valuation. That is when the surveyor does not actually leave his office and uses information online about the property and the area to prepare a valuation. This is usually cheaper, as you’d expect, than a fuller report which involves the surveyor actually visiting and inspecting your property.
Our view? Do it properly and get a physical inspection.
Quite often, an actual viewing and proper investigation of the property reveals things that you would never have picked up from a desktop valuation – and that can make quite a difference to the final valuation and therefore the amount you’re going to have to pay for to extend your lease.
Making sure you don’t pay too much to extend your lease – another job for a professional
Once the landlord has responded to the applicant’s notice of claim with a counter notice, the surveyor will need to respond to that counter notice where it touches on the value of the premium. This might need detailed discussion and an arguing of factors involved in order to reach a premium level agreeable to both parties.
It is during such negotiations that the experience and specialist knowledge of the applicant’s surveyor can ensure that their client does not pay over the odds for the lease extension. The applicant’s solicitor plays a similar role with regard to any proposed changes to the terms of the lease and ensuring the entire process is followed to the letter of the law.
Click here to read more about the costs of extending your lease
Expert witness at the First-tier Property Tribunal – a job for a professional
Should negotiations between the leaseholder and freeholder become dead-locked, the applicant’s solicitor will have the case put before the First-tier tribunal – Property Chamber (Residential Property). There the surveyor will prepare and present the necessary proof of evidence taking on the role of an expert witness and if counsel has been appointed, the surveyor will brief them as appropriate.
Online lease extension calculators – aren’t they good enough?
The importance of specialist advice in the area of leasehold extension cannot be stressed enough and whilst there are a number of good lease extension calculators online, the best person to give you professional unbiased advice on the potential cost is a specialist lease extension valuation surveyor.
Having said that, the best of the online calculators do have a use.
If, for example you are thinking about buying a short lease property but you’re worried about how much a lease extension might cost [and therefore you don’t want to go to the expense of specialist valuation] an online calculator can be helpful in providing you with a very rough idea of the premium you’re likely to have to pay to the freeholder.
Add in your own likely legal and surveyors fees, and those of the freeholder, and you have a very rough idea of how much your lease extension will cost.
And while an online calculator is useful for these kind of rough initial figures – you should never rely on them for an accurate valuation. Only a highly experienced and specialist lease extension surveyor can provide that.
Looking For A Specialist Lease Extension Surveyor – We Can Help
Over the last 20 years, our specialist team have helped thousands of leaseholders and freeholders to extend their lease. As a result, we have developed a network of surveyors who specialise in the valuations of leasehold extensions throughout England and Wales.
So wherever your property is in England and Wales, we can help you with the legal side – and put you in touch with a surveyor who really knows what they’re doing when it comes to lease extension valuation.
• Just call us on FREEPHONE 0800 1404544 for a FREE initial phone consultation and a FREE quote for extending your lease OR
• Complete the contact form below