statutory lease extension - are valuations necessary

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    statutory lease extension - are valuations necessary

    Dear All

    I am in the process of extending the lease informally, however, things got stuck and after 10 months of something that was suppose to be a quick and smooth process I now think we should do a statutory extension. Basically the landlord had a close in the last lease that every next lease needs to be in a substantially the same form (not identical). The landlord solicitor did not agree to any alterations which means that we would be in immediate breach of many regulations if we accepted the lease unaltered.
    My question is if we now go via the statutory route do we still need to do a formal valuation? The landlord is happy for the premium to be the same, so I hope we wouldn't need any extra costs?
    In your experience, how soon it can be done, provided there are no complications and everyone wants to do things quickly?

    Thank you!

    #2
    If you are relying on the statute to force the freeholder to extend then yes a valuation would be required. But if the freeholder is prepared to accept the negotiated price then presumably they are no going to accept the amendments you propose? So you're then back where you are now, I'm afraid.

    Comment


      #3
      Thank you. Just to clarify - we do not want any amendments, we just want to extend it as it is. Does the act require a valuation even if the price is agreed?

      Comment


        #4
        Originally posted by aurora1 View Post
        Thank you. Just to clarify - we do not want any amendments, we just want to extend it as it is. Does the act require a valuation even if the price is agreed?
        No there's no requirement for any independent valuation. It's only routinely used in case the offer price needs to be argued at FTT

        Comment


          #5
          The Leasehold Reform (Ground rent ) Act 2022 became effective on 30 June 2022 and your "statutory lease extension" should state "one peppercorn ground rent".

          Does the new lease include "one peppercorn" ground rent for the entire period ? The Landlord's solicitor must know this is a requirement from 30 Jun 2022 .

          Comment


            #6
            Originally posted by aurora1 View Post
            Thank you. Just to clarify - we do not want any amendments, we just want to extend it as it is. Does the act require a valuation even if the price is agreed?
            I'm confused. When you said, "The landlord solicitor did not agree to any alterations which means that we would be in immediate breach of many regulations if we accepted the lease unaltered." it suggests that you had asked for amendments.

            Comment


              #7
              Hi Sydaton

              I am sorry I should have made myself less vague.

              Basically the landlord had a close in the last lease he granted to someone else in the house that every next lease needs to be in a substantially the same form (but not identical) as the last lease he granted. In order to extend our lease as it is we had to suggest amendments to his new proposed lease which she does not like. That is why we think it will be quicker to go for the statutory route now as I believe (though am not sure) that that the above mentioned close (substantially the same form) will not apply to the statutory route.

              Comment


                #8
                This is completely contradictory. You are in breach of the lease and want amendments and then don't want amendments.

                What are these breaches that you want to force down the throats of the FH and other lessees?

                Comment


                  #9
                  I'm sure we can get to the bottom of this but not from the current information available.

                  Comment


                    #10
                    Originally posted by Gordon999 View Post
                    The Leasehold Reform (Ground rent ) Act 2022 became effective on 30 June 2022 and your "statutory lease extension" should state "one peppercorn ground rent".

                    Does the new lease include "one peppercorn" ground rent for the entire period ? The Landlord's solicitor must know this is a requirement from 30 Jun 2022 .
                    it’s either peppercorn, or can be the same as it was prior to the renewal. They basically can’t increase it but can choose not to reduce it from what the previous lease states.

                    Comment


                      #11
                      A statutory lease would be for 90 years extension added to remainder of current lease at peppercorn ground rent . The service charge contribution would remain unchanged.

                      So the lease extension would be changed to e.g 82 years remaining + 90 years extension = 172 years term at one peppercorn ground rent . The other terms in the lease will remain the same .

                      How long will this lease extension take ? It depends on how busy are your landlord's solicitor & your own solicitor .

                      Comment


                        #12
                        The peppercorn ground rent might not apply on a lease extension. The freeholder can choose to keep the ground rent as it currently is, but they cannot increase it. This is what I have been advised by a number of different solicitors now.

                        Comment


                          #13
                          The Land Registry treats the lease extension as issue of new lease : see section 1.1.1

                          https://www.gov.uk/government/public...sion-of-leases

                          Comment


                            #14
                            every stautory lease extension ais at a peppercorn ground rent

                            Comment


                              #15
                              This isn’t what I am being told by the solicitors who are doing an extension for us… they are saying the freeholder can choose to keep the ground rent as it is, put it to peppercorn, but not increase it.

                              Comment

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