License to Alter Fee

[jazzythumper]

I've been offered a fee by my freeholders fee for adding a bedroom extension a garden room to a london flat, the fee is £10k for this, which is half what an independent surveyor has estimated the value of the property will increase by after the works have been completed. The solicitors / surveyors fees are reasonable.

It will costs us more than £20k to make these improvements, but profit is not our motivation for these improvements.

I understand that there is a rule of thumb for these fees of 50% of the value of the improvement minus the cost to achieve the improvements. On this basis the freeholder would be paying us for the work!

On this basis I am wondering whether to negotiate, whether this is standard practice, and the freeholder is expecting us to negotiate, any advice would help.

Thanks

Jazzy

[Gordon999]

You should check the wording in your lease on payments for alterations made within the demised area.

If you are planning an extension outside the demised area, taking extra floor area from freeholder, the cost will not be stated in the lease . The freeholder can ask any price .

[Lawcruncher]

Does the lease prohibit alterations absolutely or say they must not be made without consent?

[jazzythumper]

Does the lease prohibit alterations absolutely or say they must not be made without consent?

It says does say must not be made without consent the exact phrase is 'such consent not to be unreasonably withheld'

[jazzythumper]

You should check the wording in your lease on payments for alterations made within the demised area.

If you are planning an extension outside the demised area, taking extra floor area from freeholder, the cost will not be stated in the lease . The freeholder can ask any price .

No wording on payments in the lease only the standard 'consent not to be unreasonably withheld' we are no planning on extending outside the demised area.

[Lawcruncher]

It says does say must not be made without consent the exact phrase is 'such consent not to be unreasonably withheld'

In that case the position is covered by section 19(2) of the Landlord and Tenant Act 1927:

In all leases whether made before or after the commencement of this Act containing a covenant condition or agreement against the making of improvements without a licence or consent, such covenant condition or agreement shall be deemed, notwithstanding any express provision to the contrary, to be subject to a proviso that such licence or consent is not to be unreasonably withheld; but this proviso does not preclude the right to require as a condition of such licence or consent the payment of a reasonable sum in respect of any damage to or diminution in the value of the premises or any neighbouring premises belonging to the landlord, and of any legal or other expenses properly incurred in connection with such licence or consent nor, in the case of an improvement which does not add to the letting value of the holding, does it preclude the right to require as a condition of such licence or consent, where such a requirement would be reasonable, an undertaking on the part of the tenant to reinstate the premises in the condition in which they were before the improvement was executed.

The landlord cannot demand a premium based on the increased value of the leasehold interest. He can only claim for depreciation. If you are improving the property there is no depreciation.

[sgclacy]

If the lessee has to break through the exterior wall to create the extension and the lessee is only demised the interior plaster surface (as is often the case) on what authority can the lessee claim that the middle part of that flank wall should become theirs.