A Fair Lease Extension?

Friday, 10th January 2020 | by: Matthew Price

One common type of enquiry we receive at Peter Barry, involves a leaseholder who’s freeholder also resides in a property in the same building.  The leaseholder wants to extend their lease. As the two parties are neighbours, is it possible to grant this but it will still depend on particular circumstances.

Leaseholder owns Share of Freehold

If both have the same length of lease, you can skip the valuation exercise and go straight to a solicitor for deeds of variation. Typically for 999 years.

Where the lease lengths are different, one leaseholder might pay the other the difference of both valuations for which you will need a specialised surveyor. This difference is far less pronounced when leases are above 80 years and not subject to marriage value.

Not requiring the serving of a formal S42 Notice is often call the informal route and saves significantly on legal fees.

Lease above 80 years

With marriage value not payable, the price for the extension is largely going to be determined by the compensation for loss of ground rent. The value of the property is still relevant 80 and 99 years, but increasingly less so above this.

You could consider a Single Joint Expert report which overcomes the conflict of interest for the surveyor. You would each receive one report in which the valuer would be required to offer their impartial opinion.

This saves the leaseholder the status quo of 2 sets of fees.

Lease below 80 years

The further you fall below this level the more expensive the extension so you will need to evaluate how far your generosity extends. Using an Extension Calculator is a good start.

If you decide to go down the formal route where the leaseholder serves a S42 Notice, there are still fair and unfair ways to act.

The leaseholder pays your valuation and legal fees, so whilst it is never recommended to go as cheap as possible (you really do get what you pay for), it is likely that a mid-ranged priced firm will be as good a choice as an expensive firm.

You also have the final say over what you are prepared to settle at so you should instruct your surveyor accordingly if you enter into negotiations.


This topic was a novel concept but there are freeholders out there to whom fairness is a valid concern

Whilst I hope this has been a helpful guide, this is still a complex field. Speak to our team of experts or drop us an email. We will be more than happy to assist.

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