Be well advised before extending your lease or enfranchisement

Indeed, it could be a costly error if you discovered once agreement had been reached that you could not afford the premium and the associated costs, which would include your own legal and valuation fees and the reasonable legal and valuation fees of the landlord.

Your surveyor should be able to provide you with a report with his professional opinion of the likely cost of a lease extension or the acquisition of the freehold.

There is little to be gained by a surveyor valuing the premium too low at a figure which has little chance of being agreed and could not be justified should the matter be heard at a Tribunal.

Equally a prospective leaseholder who wishes to extend their lease would rather be given a realistic cost rather than one so low that it is not reasonable and has little chance of being agreed.

There have been numerous cases over the past few years where surveyors have substantially under estimated the cost of a lease extension.

One particular case which comes to mind was when an overseas buyer purchased a flat in W1 with a very short lease but with the benefit of a valid Section 42 Notice having been served prior to completion.

The purchaser instructed a firm of chartered surveyors recommended by the estate agent to prepare a valuation as to the likely cost prior to purchasing the flat.

Unfortunately, the surveyor did not have much experience with lease extension valuations and advised that the likely cost of the extension would be in the region of £600,000.

The buyer made an offer based on this amount and was shocked to hear after completion that the landlord served a Counter-Notice requiring a premium of just over £1,000,000.

An independent valuation was required to help the purchaser reach an opinion as to which valuation was more accurate.

Following inspection, the opinion formed was that the correct figure was approximately £950,000 and after lengthy negotiations, this figure was subsequently agreed.

The client was angry at the low valuation provided by the original valuer and quite reasonably made the point that had he been aware of the true cost of the lease extension, he would have made a substantially lower offer for the flat and would not have lost over £350,000!

Quite clearly the purchaser received poor advice which proved very costly.

The moral of this story is that it is vital to obtain independent advice prior to commencing proceedings and to ensure that your surveyor has proper expertise.

Andrew Cohen, MRICS RICS Registered Valuer and Alan Cohen, Bsc IRRV HONS RICS Registered Valuer who are chartered surveyors at Talbots Surveying Services