The landlord’s valuer would no doubt say there is no need to be concerned about the difference between the two interests where the landlord is the same especially as the tenant is only concerned with the overall premium payable.

However it is important to differentiate as:

a) the notice has to apportion the amounts between the two landlords to avoid it being rejected as a deemed withdrawal (especially where the lessee serving the notice is assigning the right to an incoming purchaser) ; and:

b) the  resulting premium which will reduce overall.

Indeed on advising a client recently with an interest of just over 10 years but where the landlord held from itself an intermediate lease of around 63 years; the effect of relativity on the intermediate interest and deferring the freeholder’s interest by this term reduced the premium range payable by over 5%.

If a lease contains an “absolute” covenant against alterations, a landlord can charge a premium as there is a ban on an any alterations.

A “qualified” covenant is a covenant against alterations without landlord’s consent. So in this case, a qualified covenant is an implied term that a landlord cannot unreasonably withhold consent and as a consequence cannot charge a premium for consent.

Looking at this from the landlord’s perspective in the case of a collective enfranchisement claim, Schedule 6 of the LRHUDA 93 deals with the price payable by a nominee purchaser. By paragraph 2 the price payable is the aggregate of:

1. The value of the freeholder’s interest in the premises as determined in accordance with paragraph 3 of schedule 6.
2. The freeholder’s share of marriage value as determined in accordance with paragraph 4 of schedule 6.
3. Any compensation payable under paragraph 5 of schedule 6.

The first situation where paragraph 3 applies would be as at the date of claim where a landlord can carry out a proposed development without trespassing on the tenants land and without needing the tenants permission. An example would be where the landlord had reserved himself a flat roof and the right to develop is by building an additional storey.

The second situation where paragraph 4 applies is where one party to a lease can carry out a development but the project is only viable if the developer (whether landlord or tenant) acquires land or a release of a covenant to the other party to the lease. An example would be where a tenant could substantially improve the value of a top floor flat by adding a mansard addition where the landlord owns the roof void; or a ground floor flat by excavating the basement where the landlord owns the subsoil or (in both examples) there is an absolute covenant against alterations.

The third situation where paragraph 5 applies would be where the landlord could develop adjacent land but its ability to do so will be lost or impaired on the enfranchisement of the neighbouring land. An example is where such a development could be carried out in conjunction with the enfranchising premises but which cannot be developed on its own such as a penthouse flat straddling two properties where one of the properties is being enfranchised.

I will expand further on this topic in valuation terms in a following blog.

Watch this space.

When advising tenants on the likely cost to extend their leases / acquire their freehold, they are more than willing to let you inspect their property in order to form a view prior to giving formal advice. After all, they see you as their friend to hold their hand in what is perceived as a complicated process.

When advising a landlord, especially where there are more than one flat that needs to be inspected, the position is entirely different. To achieve an appointment where one can move from one flat onto the other in one visit is nigh on impossible despite the lease allowing access with reasonable notice.

Obviously one can only advise any client once one has inspected to not only check as to whether the lease terms have been complied with, condition as to state of ‘in’ or ‘out’ of repair / lasting improvements and take a photographic record but crucially to get a sense of space, aspect and gut feel essential to forming a view.

It’s as if there is a sense of fear that the ‘enemy’ wants to come round my home which is far from reality. We are all human and always strive to reach a fair result in any forthcoming negotiation.

It was an especial privilege to be instructed to advise on the range of premium payable to extend the lease of a most unusual building in the heart of Belgravia.

Although now a residential flat arranged over 4 floors, the property is reported to have been a former grain store used by the livery stable of the Duke of Wellington in the 19th Century.

What is really unusual is the massive 15 ft ceiling height  with 10ft high windows to the ground floor reception room – a truly cathedral feel to the space.

A client wanted to acquire a small area of common parts to rationalise the entrance area of his flat in addition to carrying out other internal changes.

The discount negotiated for the extra space to be acquired amounted to 35% net.

However this increases to 51% effective when the space of the existing boundary wall is removed and incorporated into the flat.

2022 was a year of delays to not only get claims started, but once ‘on the road’ (more…)

It is very pleasing to receive from a client an email thanking me for sorting everything out shortly after completion of his extended lease last week despite prefacing his gratitude with the above statement.

Yet:

Why would the landlord’s valuer refuse to negotiate beyond the point when it was too late to avoid much additional cost in preparing for a tribunal hearing?

to then find:

As preparation had already been made, counsel instructed etc. the landlord’s valuer would likewise prepare and not try and negotiate even though offers had been made to.

to then find:

Once the tribunal had determined the premium payable, the landlord and its solicitors found every excuse to delay to try and bring about a deemed withdrawal thus incurring added legal costs in applying to court for a vesting order despite being ready to complete.

The moral of this story is to ensure the best advisers are instructed to ensure the client is protected at all times at every step.

It is though sad that in the case of this landlord, the only message one can give future clients is to warn them at the outset that the route ahead will be litigious and more expensive than would otherwise be the case if negotiations could begin (as Parliament intended) to reach settlement of the premium well in time of having to prepare for a hearing; and once settled, agreement of the new lease terms could proceed swiftly afterwards as the majority of claims on other estates indeed do.

The main points that came out of the Westminster Legal Policy Forum keynote seminar (more…)

An important conference was held last week on implementing the proposed changes to the legislation, its impact on the enfranchisement calculations and further options for reform.

I will be updating my blog shortly with the key note points raised with particular emphasis on the valuation issues discussed.

Watch this space.

The minute one’s lease drops to 80 years exactly, the cost to extend the lease by a further 90 years increases by 300%! (more…)