It is fair to say that many flatbuyers pay little attention to the consequences of the lease terms of their intended purchase. Sometimes it can be ‘the right flat in the right area for the right money’. Many buyers, however, are in for a shock when years after moving in and after possibly putting the property back on the market for sale, they are told the lease is too short for most lenders to regard as a suitable security and the price of an extension (or premium) is likely to be considerable.
A recent client of Sussex Surveyors had the foresight and wherewithal to organise herself in such a way as to mitigate the impact of such a shock. Hers was a case study in what can be achieved by diligently working with her expert advisors both in the valuation of the property along with her legal team. Like many, she had taken her eye off the ball and allowed the lease to drop below the critical 80 year cut off point; a point below which the costs of a lease extension significantly increase. Nevertheless, the client organised her resources and helped the process considerably by locating her lease and making it available for our perusal prior to the calculation of the premium. Not only that, she meticulously itemised those improvements to her flat which we could legitimately deduct form her long lease value thus reducing her liability. As she knew her freeholder well, a strategy was devised to further maximise her chances of successfully reducing the premium. Our initial offer was met by a request by her freeholder to carry out a further valuation the cost of which our client had to bear as is customary in an informal request for a lease extension made ‘outside of the Act’.
Again when the second surveyor inspected, our client went to work impressing him by presenting her list of improvements and her knowledge of the value of her flat with the aid of comparables and our analysis. The subsequent negotiations went over the collected data and the latest cases in this field arriving upon a settlement which was to the satisfaction of the client. Indeed, what we achieved was better than we had hoped. Management of client’s expectations is key from a professional advisor’s viewpoint – but a client who is proactively engaged in the process is a blessing!
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