QUESTION
I need advice on a lease extension on a small studio flat located in London N10, with a landlord who is acting on behalf of his mother and increasing prices drastically from one year to another. The lease has just slipped below 70 years. What costs are involved (legal, survey, tribunal costs etc) if going via statutory method?
ANSWER
The reader is asking about the additional costs of making a claim that will result in a fairly modest premium being paid. In addition to the premium, the reader will have to pay the freeholder’s legal costs, the costs of the freeholder getting a valuation and the reader’s own legal and valuation and negotiation costs. If the premium is over £40,000 (which is very unlikely in this case) there is also Stamp Duty Land Tax to be paid.
The best way of finding out the reader’s own costs is to get quotations. No-one charges for that and most of us professionals are used to prospective clients getting competitive quotations. Many firms advertise their services in the pages of News on the Block, on the LEASE website and elsewhere and would be only too glad to give estimates of their own costs and to guess at those of the landlord. However as a very general guide, I would put the reader’s own costs at about £3,500 including VAT and estimate that the landlord’s costs will be about the same.
The reader refers to tribunal costs. All prospective claimants should ask solicitors to cover the cost of making an application to the tribunal to preserve the life of the claim beyond 6 months after the counter-notice. That is in effect a procedural application. However the case will probably never proceed beyond the application stage.
Whilst the tribunal refers to itself as informal, in fact there is considerable formality and expense to its proceedings if a party is to be properly represented. While the tribunal is an expert tribunal. it is judging between the parties and the evidence put to it. It cannot act for the lessee and cross-examine the landlord’s expert and it cannot find evidence of its own. A party incurs considerable cost in going to a hearing, say £7,500 to £10,000 per day of hearing. In practice no-one goes that far unless the amount at stake is at least double the cost. So very few cases are actually heard; the tribunal has estimated that less than 1% of all applications made, result in hearings. The reader is unlikely to incur tribunal hearing costs, he should not consider them further.
Jennifer Ellis, Partner at Langley Taylor
