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  • Leasehold Property

    DIY Section 42 notice

    Hi we recently served a S42 notice on our freeholder to formally extend our lease. Our lease has 79 years remaining and because of the low figure 4-6k recommend cost for this we decided to try to do this alone

    Today we received a letter from the FH solicitor in acknowledgement of our S42 requesting the mandatory 10% up front payment.  We based our valuation on resent sales prices of identical unit on our development.

    We have been asked to send details of our valuer, and also supply evidence that our S42 notice “was served upon the management company”  we sent copies via Royal Mail to all companies named on our lease. We only sent the FH he original via special delivery.

    Because we are trying to keep cost to a minimum we want to see what exactly the FH will propose as we know we will have to pay their cost. Could anyone tell us if we are liable to have a professional valuation carried out and should we have sent all copies of the S42 via secure mail.

    Thanks in anticipation.

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    Track down Katie Cohen she will be worth every penny . You may think you are saving
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    You are highly likely to be required to pay for a professional valuation. You should also serve notices correctly so that you are inside the enfranchisement rules.

    Although I cannot comment, I would suggest Neil is right and an initial call to Katie Cohen is probably a good starting point.

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022

    We understand completely we are liable or all the FH reasonable legal and valuation cost. We wondered if we were liable to have a valuer and have served the management company the S42 via the same secure post we sent the notice to the FH. We hope to get a counter offer and if it were deemed to be over the top, we would then seek professional help.   
    Thanks for the input.
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    Yes you are liable for all of the freeholders costs and this includes a valuation of the premium.
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    A lease is liable for the freeholders costs of serving the counter notice and the costs of drafting the deed of surrender and regrant

    The lessee is not responsible for the landlords costs in negotiation 

    The lessee should expect to pay around £1850 towards the landlords costs including VAT and obviously their own costs - a oral of some. £4000. 

    I know a great deal on the subject and why it should cost this much is a reason the government needs to legislate to help deliver its promise of making it quicker and easier and cheaper to extend the lease . I don’t think the principals in the valuation formula can or should be changed but the use of prescribed rates would assist particularly if an online calculator was put on line by the government 

    If a landlord acquired his interest post 1993 I think he should bear his own costs - he knew of such a possibility that enfranchisement / lease ext was a possibility and therefore it is equitable in part that he bears his own costs during the inevitable  windfall he receives
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    I expect the freeholder will wish to instruct the valuer and you will be asked to pay for this.
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    Thanks again, We completely understand we are to pay the FH cost, We have spoke to local agents and have sight of recent  identical sales in our block, this we used as our valuation. We also know other leaseholders have recently extended their leases as they are all around the 80 yr mark. So we have a good idea what we should be paying,  would it make a difference if we don't use a professional valuer, unless we have to. We have to hand other premiums paid by other leaseholders and will use that as a guide. Or are we missing something?

    thanks

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    You should seek specialist legal help, most normal conveyance / solicitors won’t do these with their knowledge, most estate agents have no clue with regards to the section 42 route. In my humble opinion your are taking a big risk especially if this is your first time with this
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    There is a formulae for calculating the cost of a lease extension, there are various calculators on the internet which will give an indication of likely cost, for example -

    https://www.lease-advice.org/calculator/

    https://lease-extensions.org.uk/calculator.html

    If you have a mortgage on your property the lender will also need to agree to the lease extension, it's unlikely they would refuse but additional paperwork to consider.

    I would not attempt to complete a lease extension without using a solicitor.


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    Thanks for the further responses,
    We are looking to appoint a lease extension specialist. 
    The request for information from the Landlords solicitor was more than 21 days after our notice was served. 
    We note this quote regarding S42 notice 
    “ The landlord can then ask you for information within 21 days of receiving your notice which you must provide within 21 days.” 
    Would we be within our rights to ignore the request for information on the above grounds. Whilst we instruct  a professional to deal with the extension. 
    Thanks again
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