Can freeholder demand 20% of value for giving consent?

[jackieflan]

Hi there

I have a leasehold agreement for the ground floor level of a split-level maisonette. I am wanting to carry out some extension work to the property, a side and rear extension.

The freeholder of the property has said that in order to grant consent to the work they believe they have a right for me to pay them 20% of the value that will be added to the property by doing the extension.

I have not been able to find evidence of this anywhere. Is someone able to please let me know whether she is within her rights and is being reasonable in asking for this?

Is there any evidence to point to this anywhere, as well as to how this value would be calculated?

Many thanks,
Jaclyn

[jeffrey]

You have no right to extend at all, if that involves building-out beyond the demised property.

[jackieflan]

Hi Jeffrey

I understand that I need the freeholder's permission to carry out the extension work, as it states in my lease that I need approval for any structural work.

However, I woud like to know whether it is standard practice for the freeholder to ask for me to pay 20% of the total value of the extension to her before consent is granted, whether there is any evidence of this anywhere, and whether there is a standard calculation for how this value is reached?

Kind regards,
Jaclyn

[jeffrey]

Again: is the extension to be wholly within the area of which you already the leasehold estate?
Or do you propose to build-out beyond that area?

[mk1fan]

I'd also add that you seem to be switching what the 20% they are claiming is of. Is it 20% of the rise in value of the property (the flat) that the works would acheive or are they 20% of the build costs.

[jackieflan]

Apologies for not explaining fully.

The extension is wholly within the area to which we hold the leasehold i.e. we own the leasehold to the garden and the downstairs flat, and the extension will be extending the downstairs flat into the garden. We will, however, be extending two walls that are shared by the upstairs flat, the owner of which is also the owner of the freehold.

The amount that she is claiming is 20% of any value added to the property as a result of the extension works.

[jeffrey]

OK. Are any parts of the extension's site subject to easements for other leaseholders (or L)?

[jackieflan]

No, not as far as I know. It is a split level maisonette with our property on the lower floor, and our freeholders property on the second floor. We are the only two parties involved.

[jeffrey]

So you have the ground/first floors?

[jackieflan]

Sorry - by second floor I meant upstairs. No - I have the ground floor, including all of the garden. The freeholder has the first floor, no garden. We are the only two parties involved.

[jeffrey]

In your lease, there must be a clause which prohibits/restricts alterations unless L consents.
Please post its exact wording here.

[jackieflan]

Under the tenant responsibility section it says "Not to sever cut damage or weaken any of the structural parts roof or walls of the Property or make any structural alterations or additions to the Property".

I do understand that we need her consent - what I would like to understand is whether it is standard practice for her to ask for 20% of the profit share.

[jeffrey]

OK- but that prohibition is an absolute bar. Does the clause continue "except with L's consent"?
If not, L can refuse absolutely. None of s.19 of LTA 1927 applies; it's limited to "except with L's consent" cases.

[jackieflan]

No - there is nothing that states "unless with Freeholder's consent". Is there likely to be a problem even if the freeholder agrees? Surely if they do give their consent then that overrides the lease?

My initial question was not about my rights - it was more trying to understand if the request for 20% of the increase in valus is standard industry practice.

[jeffrey]

The point is that there are three types of restriction:
1. Not to.
2. Not to unless L consents.
3. Not to unless L consents (such consent not to be delayed/withheld).

The 1927 Act usually makes type 2 into type 3.

But the 1927 Act has no impact on type 1. Here, T has no right at all to any consent. L has absolute and unfettered discretion to withhold or grant it. It's a bit the same as (in L&T) when T wants to surrender early- L can impose any conditions at all; T has no control over this; and T's only resort is not to surrender early.

So in your case, L can impose any conditions at all; you (T) have no control over this; and your only resort is not to proceed with the proposed works. If L agrees to consent in exchange for £££, then sorry but that's just how it is.