Sussex Lease Extensions Blog

Negotiating Lease Extensions in Private Agreement Negotiations

Lease extensions can be obtained in two ways: via the provisions of the 1993 Leasehold Reform, Housing & Urban Development Act, or through agreeing terms informally with the freeholder. This will depend upon the willingness of a particular freeholder to be reasonable and whether the freeholder is keen to negotiate non statutory terms, such as a shorter lease extension or retained ground rent. However, some freeholders simply will not agree anything informally or will only agree unrealistic terms.

If terms can be agreed informally then the leaseholder could save costs and time. Also, by agreeing a shorter extension or ongoing ground rent the premium should be lower. It is still necessary to instruct a specialist lease extension valuer. They will be able to guide you on the cost of the lease extension and negotiate reasonable terms on your behalf.

Before Commencing Informal Lease Extension Negotiations

Before entering into any negotiations with the freeholder, determine what a reasonable premium is. Commission a valuation by a specialist lease extension valuation surveyor. The surveyor will advise upon the likely statutory costs and provide a clear indication on what would be reasonable for a shorter extension with a retained ground rent.

Approaching the Freeholder

With information and professional advice gathered, it’s time to approach the freeholder. How you go about this will depend entirely upon your relationship with the freeholder. Those entering into private agreement negotiations tend to have a friendly relationship, making the process much easier. If not, then it’s best for the valuation surveyor to make the initial approach to the freeholder, often a more reasonable response will be received if the freeholder realises that the leaseholder is represented.

Negotiating the Lease Extension

Remember – this is a negotiation. When you begin negotiations with the freeholder there’s no reason to offer the full premium. Try entering an offer below the surveyor or calculated-valued premium as a starting point. Chances are, if you’re on good terms, the freeholder will be open to offers.

Unfortunately many freeholders will not agree informal negotiations, in some cases requesting upfront payments simply to consider matters. In these circumstances it will then become necessary for matters to proceed formally via the Statutory Route with formal notice served on the freeholder.

Where possible you should always seek expert advice when beginning lease extension proceedings. Often experienced valuation surveyors will know whether a particular freeholder will be agreeable to informal negotiations prior to any work commencing – talk to the Sussex Lease Extensions team today for expert advice and help.

This entry was posted on Wednesday, August 7th, 2013 at 2:45 pm and is filed under Lease Extension Advice, Lease extensions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.