Page 4 - lease_extensions

A step by step guide to lease extensions 3

Step 2 – Serving the notice

Should I serve a formal notice or open informal discussions?

This is a difficult question to answer!
Some freeholders will refuse to entertain discussions without a formal notice. From the
freeholder’s perspective, without formal notice he/she is at risk for fees to cover professional
advice they need to negotiate with you.

That being said, if your freeholder lives in the block it would be better to have a chat with them
first. Unfortunately, some freeholders still don’t realise that under the Leasehold Reform & Urban
Development Act 1993, it is a leaseholder's right to claim a statutory lease extension.
The notice that you have to serve on the freeholder and all intermediate landlords invokes
statutory timescales for response. The information a Leaseholder needs to state on their notice
includes:

• Details of your lease
• The premium you would like to pay for the lease extension

Understanding what premium you should quote on your notice requires specialist valuation advice
(See Step 1). There are more factors to take into account in a lease extension valuation than in
a typical mortgage valuation, as set out above, as well as the requirement to assess the
compensation due to the landlord and intermediate interests for postponing their valuable
reversion by a further 90 years. In law, the leaseholder claiming his/her right to a lease extension
is responsible for both party’s costs. It is our understanding that if the residents have served
notice then the landlord's surveyor’s fees form part of the purchase price together with reasonable
legal fees.

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