Lease extension formal negotiations with valuer

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    Lease extension formal negotiations with valuer

    Can anyone advise?
    I received the Valuers calculations for the lease extension cost. They had grossly overvalued the property.
    With the help of a Chartered surveyor we sent our calculations with evidence of similar nearby sold property values to reflect our valuations. I also supplied a local estate agents valuation of our property in line with our valuation. We used Lease graph of relativity for the average of relativity as a predicted indicator that was 85.32% the FH valuer quoted a relativity of 79.45%, I attached a copy of the printout obtained via the Graphs of Relativity website.
    I requested them to take instructions from the landlord at my level.
    I had this response 21 days later after a polite reminder:

    " I am unable to recommend your offer as it falls too far short of the level of compensation properly payable. The Upper Tribunal has recently ruled on the issue of relativity in the Barry and Peggy High Foundation case and the decision has been followed by the FTT. The value of subject flat with an extended lease is not fairly represented in your valuation"

    I Have looked at the issue of relativity there are plenty of nearby comparable sold prices of short and long leases that back our valuation, we believe the valuation reflects the current condition of the property internal and external.
    Could there also be a case for the onerous ground rent that's currently £790 for the flat in Essex, would there be some relief on the valuation because the GR Is more than 1% of the valuation some lenders are refusing to mortgage on onerous GRs.
    My surveyor is away travelling till next month and i'm approaching the negation deadline. I would appreciate any pointers on how to handle this. I hope this comes across ok.
    Thanks in anticipation

    #2
    I take it you are negotiating a lease extension on an informal basis. If this is the case it is open to the parties to negotiate and the landlord can ask whatever they want for a lease extension. You do not have to agree, of course.

    The alternative is to go the statutory route then the FTT will determine a fair premium based on all the factors including relativity. Via this route + 90 years will be added to the unexpired lease term and the ground rent will be reduced to peppercorn (nil).

    See the LEASE website for further information and use their lease-extension calculator to get an idea of premium. Note you cannot rely on LEASE's calculator or use the information in court but is is helpful as a guide.

    Comment


      #3
      Here is some info posted on the Barry and Peggy case :

      http://www.jpclaw.co.uk/uploads/News...nt%20Value.pdf

      It seems the valuation was higher because there was development land in the freehold. Are you in the same situation ?

      Comment


        #4
        Thanks for the response,this is a statutory s42 lease extension

        I believe this is the recent Barry and Peggy case (there are many) the valuer was referring to, as it about the subject of relativity:

        https://www.bailii.org/uk/cases/UKUT/LC/2019/242.html

        On that i have researched and noted that relativity graphs seems to only be used if there are no comparable property related sales, there are many similar comparables close by in line with our valuation.

        The subject property as it stands has the burden of the onerous ground rent making it viable to only mainly cash buyers, the current condition of the exterior also reflects the valuation that we believe is true and fair in the current climate.
        Is the above taken into considerations in valuers valuations ?


        Thanks

        Comment


          #5
          If you are going the statutory route, the FTT will decide a fair premium and the ground rent will be reduced to nil.

          Comment


            #6
            I understand all about the FTT. I would like to somehow make the FH valuer see sense and negotiate properly. Or are they all stubborn on this front. Is there a way to calculate the capitalisation of the onerous GR ? I see in some cases this is discounted off the long leasehold price.

            Comment

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