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When extending your lease under the statutory procedure (i.e. by serving a s42 Notice under the Leasehold Reform, Housing and Urban Development Act 1993) it is vital that you have obtained a report from an expert valuer or surveyor before the s42 Notice is served. Many leaseholders come to us and ask if they can use their estate agent’s valuation or use the suggestions on one of the many lease extension calculators that are available free of charge online. The short answer, is no.
Estate agents will value the property in accordance with the market forces of supply and demand. They will give you an indication of what someone is prepared to pay for it. This is not the same as what the flat is worth. You will need to instruct a valuer who is familiar with the provisions of the 1993 Act, which contains the basic statutory formula used to calculate the cost of a lease extension. Similarly, the free online calculators are equally unsuitable as they do not take into account the size of the flat, any rising ground rents or the area in which it is located. Lease extension calculations are not a ‘one size fits all’ and so whilst the formula remains the same, the calculations are specific to the property in question. The free calculators have their place as a useful budgeting tool but are by no means acceptable as a substitute for professional valuation advice.
Taking inadequate advice can result in the s42 Notice being declared invalid, which is a disastrous result for a leaseholder.
The 1993 Act prescribed the contents of a s42 Notice. If this is prepared by a solicitor or conveyancer, or anyone else who is unfamiliar with the mandatory requirements then, as above, errors could have the effect of invalidating the Notice. An invalid Notice is basically unenforceable meaning that a leaseholder would have to start the process again and serve a fresh Notice, all the while remaining liable for any legal and valuation costs the freeholder incurred as a result of the invalid Notice. This would be costly exercise for any leaseholder and so it is vital that matters are handled by a professional from the outset to avoid any costly mistakes.
The statutory provisions leave no margin for error and even if a valid s42 Notice is served, the lease extension process is not complete. The Act contains deadlines and processes that must be adhered to. The consequences for a leaseholder for failing to comply can be quite draconian; at worst the s42 Notice is ‘deemed withdrawn’ (i.e. cancelled) meaning that a leaseholder could not force a lease extension at that time. Worse still, the leaseholder is prevented from serving a fresh s42 Notice for a period of 12 months beginning with the day after the day on which the s42 Notice was deemed withdrawn. In 12 months time the premium payable would have risen sharply and so any leaseholder would be considerably out of pocket as they will have had to pay the freeholder’s legal and valuation costs incurred to date, with no lease extension at the end to show for it.
At Biscoes we are experts in this niche area of law and so can guide you through the process. We have excellent working relationships with surveyors across Hampshire, East and West Sussex, Dorset, Wiltshire and London and so can ensure that your lease extension is in safe hands.
Call Sam Davies on 02392 660261 to discuss the process and ensure that you receive the best advice