myleasehold carries out a wide variety of work for both Landlords and Tenants. Below are just a few examples of what we do.
FREEHOLD PURCHASE IN PINNER
With a view to taking control of the management of their building, a group of 12 flat owners instructed myleasehold to undertake a valuation for a collective enfranchisement. The total value of the flats in the block was in the region of £10,000,000 and each lease had approximately 120 unexpired.
In addition to valuing the freehold, myleasehold’s advice to the flat owners was to approach the Freeholder to enquire whether they would consider a disposal of the freehold, and if so on what terms. Not only were the Landlords receptive to selling the freehold, the price negotiated by myleasehold was at a lower level compared to the likely outcome if a Notice of Claim had been served using the formal route. The premium was worth up to £150,000 under the legislation, whilst the agreed price was £110,000.
Not only was there a notable saving on the premium, there was a significant fee saving compared to the fees that would have been incurred (at the Leaseholders’ expense) had the freehold been acquired using the formal route.
FREEHOLD PURCHASE IN TOWER HAMLETS
With initial valuation advice first provided in August 2010, it was not until March 2013 that the premium for the freehold of this property was finally agreed.
The building, a church converted into 34 self-contained flats in the 1980s, is located in the east end of London E14 – Tower Hamlets. The values of the flats ranged from £200,000 to £250,000 and the leases were approximately 73 years unexpired at the date of the Notice of Claim.
Enfranchisement claims for flat owners can be slow and time consuming, as demonstrated in this case by the delay of just under 2 years from August 2010 to September 2012, which was the date that a Notice of Claim was finally served. The final premium agreed with the Landlord was within the target range, and the matter settled without referral to a Tribunal.
myleasehold successfully negotiated a saving close to £170,000 down from the Landlord’s Counter Notice. One lesson to flat owners considering an enfranchisement is to act as quickly as possible. In this case the premium had increased from the date of the original valuation advice. The two main contributing factors were that the leases were shorter by 2 years and the values of the flats had increased during the intervening period, further compounding the premium.
INFORMAL LEASE EXTENSION IN LONDON, N1
In this case a high value flat was being sold with a lease of just over 70 years unexpired. The flat owner informally approached their Landlord and enquired on a premium to extend the lease. The Landlord informally put forward a proposal to extend the lease to 125 years subject to a ground rent. Under the legislation no ground rent is payable.
Myleasehold were instructed to advise the flat owner on the merits of the Landlord’s proposal. By way of a desktop valuation and taking into account the offer received for the flat, which assumed an extended lease, we advised the flat owner that the proposal was very fair, marginally below a likely outcome were the lease to be extended under the Act. On the back of our advice, the lease was extended and the flat sold.
Having taken advice from us on the likely premium to extend the lease under the Act, the Tenant was able to make an informed decision, deal with the matter informally (thus saving on professional fees) and sell the flat.
KINGSTON UPON THAMES LEASE EXTENSION
A Landlord should receive compensation for what he is entitled to but not necessarily what he wants. This precept was put to task during a lease extension for a flat worth £260,000 subject to a lease of 84 years. Acting for the Tenant, we valued the premium be worth £4,900, which was at odds to the Landlord’s rigid position of £10,000. After several months the Landlord did improve this position to £8,000, which we still considered to be excessive and unreasonable.
We told the Landlord’s surveyor that we would apply to the LVT for their determination, but that it would be in everyone’s interest for a compromise to be found prior to a hearing.
Realising that the Landlord’s position and attitude was unreasonable, we settled at a premium of £6,000, which while above our target, was a fair compromise that prevented the unrecoverable LVT costs being spent by our client. The client’s testimonial was very favourable, as they knew that we had to bide our time and ‘chip away’ at the Landlord’s surveyor, encouraging a common sense approach to what was a modest value transaction.
INFORMAL LEASE EXTESNION IN LONDON E17
myleasehold were instructed to calculate the premium for a lease extension in July 2012. Mindful of our client’s costs, we recommended we carry out a desktop valuation (a valuation without a site visit). Our advice to our client, the flat owner, was that they explore the possibility of obtaining a lease extension without serving a formal Notice of claim, so as to save legal and valuation costs.
We reported a settlement premium of £24,000, and following negotiations with the Landlord we managed to secure a settlement at our reported premium of £24,000. Bearing in mind that our client was looking to sell the property once the lease had been extended, and therefore the timing and efficiency of the lease extension was crucial, we agreed a fixed ground rent of £150 per annum to offset the Landlord’s legal and valuation fees and to make the transaction more attractive to the Landlord.
PORCHESTER GARDENS W2
Whilst it is always our ambition to value, negotiate and settle a lease extension premium with minimum fuss, there are occasions when the actions of the other side, which in this case were the Landlord or his surveyor, result in an application being made by the Tenant to the LVT, in a protective action.
Under the legislation, a Tenant must apply within strict time limits, failing which the claim for a new lease is deemed withdrawn, and the Tenant needs to wait a further year before re-applying. At that point, the lease is shorter, the premium will be higher and the cost of a second set of fees is incurred.
In this case, despite continued attempts by us to engage the Landlord’s valuer, for whatever reason we were unable to do so until an LVT hearing date had been set. Once we were able to have meaningful discourse we agreed the premium within 4% of our target valuation.
It is unfortunate when extra costs of an LVT application need to be incurred as they are no more than wasted costs. The problem is that some Landlords adopt a certain style, which means they are costs that cannot be avoided.
Nonetheless, the outcome was favourable and the Tenant had the benefit of not paying the premium itself for in excess of one year from the valuation date. Another benefit the Tenant had from instructing us was that our negotiation fee was capped and agreed in advance, so even though the delayed dealings involved us in much extra work, additional fees were not incurred by our client for our services.
The above sample is a representation of the cases myleasehold typically advises on, instructed via firms of solicitors or leaseholders direct.
Discover the importance of a good lease when it comes to valuing a property – watch a video interview with Mark Wilson broadcast on OneMove News in January 2008.