Is there a limit to what constitutes a premium?

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    Is there a limit to what constitutes a premium?

    Evening all,

    I have a two bedroom garden flat and a second child on the way. So I am planning on an extension to give us more living space. Although the garden is demised to me, the lease clearly states that I cannot cut maim alter or injure any of the principal timbers or walls...

    So am prepared to negotiate with the freeholder. However, I believe the work will break even or add about £10K after the works have completed. So I just wanted to check if there is a limit on what constitutes a premium? IE the freehold cannot come up with an arbitrary amount?

    Thanks in advance.

    #2
    If the lease alows / freeholder is usually allowed to authorise alterationss - in writing that you can add an extention over your garden, but he is entitled to receive detailed plans from you of the proposed alteratios.
    He is also allowed to get his own surveyor to check those plans, and at your cost even if the outcome over all that is that you are refused permission.

    The lease may say on no account must ANY alterations be made. then you will get a refusal ( usually there is a provision is in the lease that a freeholder cannot Reasonably refuse.)

    Also the freeholder can ask for whatever he wants £ xxxxxx for permisin to alter / add / extend. There is no limit, but the average is he usually asks for 50% or the increase in value. After all, it's the freeholders building either purpose built or converted. if the freeholder wanted a 3 bedroom flat, he would have added one at the time, and sold the lease at a higher price, which is what you may eventully do, so why should a leaseholder make a profit from altering that which is only leased, when the freeholder usuall decides how many bedrooms there are.


    Comment


      #3
      Thanks RAM. Bit ridiculous there is no limit. The alternative of course is to purchase the freehold through collective enfranchisement.

      Comment


        #4
        Originally posted by nomadiclord View Post
        Thanks RAM. Bit ridiculous there is no limit. The alternative of course is to purchase the freehold through collective enfranchisement.
        Don't think that by buying the freehold through collective enfranchisement allows you to change the lease to suit you. Or the law to suit you.

        you can ask any amount for any item - it's also stops people from buying an item or not bothering to do the conversion.

        If the lease is not defective, you cannot change it and the the covanant
        "Not to maim alter or injure any of the principal timbers or walls" will remain.

        As before, look for "is there is a provision is in the lease that a freeholder cannot Reasonably refuse." against certain covenants.


        Comment


          #5
          Sorry ram on this I disagree. If I enfranchise with the owner upstairs then the ability to review the lease opens up.

          As has been mentioned numerous times on this forums, getting the leaseholder to pay twice for an improvement is dubious. The law is changing in this regard but doubtful it will be in this parliament.

          The lease doesn't have the consent clause, it is restrictive. And doesn't help it is a company that is the sister organisation of the EA that sold me the flat and tried to charge me double for a lease extension.

          I guess greed has no bounds eh?

          Comment


            #6
            Originally posted by nomadiclord View Post
            If I enfranchise with the owner upstairs then the ability to review the lease opens up.
            Technically, yes - but only because new leases (or a deed or variation) can be issued if all leaseholders and everyone with a share of the freehold agree on the details.

            You cannot agree to breach the lease, but you can agree to change the lease.
            It then becomes a question of what the other leaseholder expects to get from the change that will benefit them - and a question of who will pay for the costs involved with altering the leases.

            Comment


              #7
              Originally posted by Macromia View Post
              It then becomes a question of what the other leaseholder expects to get from the change that will benefit them - and a question of who will pay for the costs involved with altering the leases.
              Sounds as though nomadiclord wants a free for all, especially as he said -"I guess greed has no bounds eh?". and that brings with it more problems with refusals from the other flat possibly. and / or the other wants to build on top of the extension, if the lease says the Landlord cannot refuse !


              Comment


                #8
                Originally posted by ram View Post
                Sounds as though nomadiclord wants a free for all...
                Yes.
                Altering leases to allow YOU to do whatever you want might sound like a good idea - but it can come back to 'bite you' if other leaseholders can then do whatever they want!

                Comment


                  #9
                  Originally posted by Macromia View Post

                  Yes.
                  Altering leases to allow YOU to do whatever you want might sound like a good idea - but it can come back to 'bite you' if other leaseholders can then do whatever they want!
                  The phrase "I guess greed has no bounds eh?" i read incorrecrtly, and refers to the seller of the flat to him.
                  but I still say Sounds as though nomadiclord wants a free for all...

                  Comment


                    #10
                    A flat is not a house and the freeholder is entitled strictly speaking under a typical lease to say no to an application by the ground floor lessee to extend their flat to into the garden. However if the ground floor flat owner undertakes to pay an increased % of the service charge (to cover the higher reinstatement value) and be responsible for the repair of the roof to the newly extended area for say 25 years, and obtain all requisite consents then usually a freeholder will agree. The only hitch in practice that I have found with these schemes is that if for example gutter repairs are required once the ground floor lessee has built out a rear scaffold will be much more difficult to put up and certainly more expensive. A thoughtful landlord will require a deed requiring all of these points to be dealt with and reserving the right to bear to scaffold on the roof of the rear extension.

                    Comment


                      #11
                      Originally posted by flyingfreehold View Post
                      A flat is not a house and the freeholder is entitled strictly speaking under a typical lease to say no to an application

                      I must disagree with most of your points.

                      A typical lease will say the freeholder must be asked for permission, which he cannot reasonably refuse.

                      Any ground floor extension paid for by a leaseholder, outwards into the demised garden will not belong to the freeholder, and leaseholder will be required to maintain the whole extension. ( That is the way it is normally done )

                      The freeholder did not build the extension, which will be demised to the leaseholder, and freeholder has no obligation, nor legal obligation to maintain it, therefore no on costs can be passed on to the other leaseholders.
                      I would be seriously anoyed if my service charges went up to pay for a leaseholders demised extra rooms, gutter cleaning, and extra costs for scaffolding.

                      The lease will be changed to include, via a deed of variation, to include the extension, and to be fully maintained by the leaseholder, and to be insured by the leaseholder, and a note to all othere leaseholders that they are not responsible via service charges to maintain the new extension.

                      I agree with the scaffolding, that the extension owner pays for extra scafolding.



                      Comment


                        #12
                        Leases of flats often have an absolute bar on alterations in which case a freeholder would be able to resist an application to extend into a garden. This is particularly so in the case of mansion blocks where the leases go back into Edwardian England. If however it is some small house divided into a few flats there may not be an absolute bar. This question begins and ends with what the lease says.

                        Comment


                          #13
                          Apologies for the late response, I've been exploring my options.

                          So first option, which I believe is off the table is to buy the freehold. The flat upstairs is rented out with a lease that is below 80 years. The owner is not interested in collective enfranchisement as the cost is too prohibitive. However I suspect he is awaiting the proposed legislative changes around marriage value to be altered in this parliament. If he was willing to participate, I am sure the loft in his flat was not demised and I would extend and so could he, so it would have been a mutual win/win.

                          I believe I cannot purchase the freehold outright as in a converted property with only 2 flats, both leaseholders must participate.

                          Option 2, pay the premium. However the freeholders own "sister" estate agent told me when buying the house what the maximum value would be. The cost of the extension would be a minimum of £30K, I believe the maximum additional value would be circa £40K.

                          So if the freeholder asked for £5K, that's fine. However if they asked for £30K, that would not be. So my question was about the thresholds of the premium, hence the greed has no bounds comment...

                          The freeholder has form, the lease extension at purchase was double what the market rate was, so I declined. The building insurance quote has come through is triple what the market rate is.

                          In terms of the lease, it is largely a restrictive convent. The garden is demised to me alone. It is the usual clause about "shall not maim or alter walls/timber".

                          If it were not for the second child on the way, we could live with the as is space...



                          Comment


                            #14
                            Originally posted by nomadiclord View Post
                            Apologies for the late response, I've been exploring my options.
                            I believe I cannot purchase the freehold outright as in a converted property with only 2 flats, both leaseholders must participate.
                            You can of course purchase the freehold by informal negotiation, though technically you should hold the freehold title in a different entity.
                            As the other lease is short the cost may be prohibitive ...

                            Comment


                              #15
                              Thank you Section20z, an informal freehold purchase is not something I have considered, as I was unaware. Is there a precedence where I can see this?

                              The freeholder could look to offload the potential loss of marriage value through future legislation to me in effect. And I would sell the freeholder when I sell the home, so I would recoup some of the sunk funds.

                              Comment

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