Lease Extension Valuations
1. Leasehold Extension Valuation Report only (without negotiating with the Freeholder)
The lease extension valuation calculates the amount you’ll need to pay your freeholder to add an additional number of years to your current lease term.
2. Negotiating with the Freeholder
Negotiations are started by serving a notice on your freeholder which stakes your claim to your lease extension and offers them a price. This will need to be a reasonable starting point but will often be on the low side to leave some space for negotiation. Your freeholder will then respond with a counteroffer, which is commonly much higher – sometimes unreasonably so. A negotiation will almost always be required. Your valuer and the freeholder’s valuer will then exchange their calculations, which allows both sides to see where the differences lie. A good negotiator will present evidence which supports your position whilst countering the freeholder’s evidence with arguments to undermine it. It is common that each side will make concessions based on the evidence and arguments presented. Usually, this ends up in finding a figure that everyone is prepared to accept.
3. Negotiating thereafter with the freeholder or if it goes to tribunal. If you can’t agree a premium with your freeholder, then the recourse is to make an application to the First Tier (Property) Tribunal who will determine it for you.
Energy Performance Certificates
You’ve definitely seen them, you just might not have known what they were called. Energy Performance Certificates (EPCs) state how energy-efficient a property is, with a coloured coded key. From the green A (very efficient) to the red G (inefficient), it is a legal requirement to undergo an EPC survey which will highlight improvements that should be made.
In line with the Government’s proposed enhanced energy commitments, it is possible that EPC requirements could change to a minimum EPC rating of C or above by 2025 for new tenancies, by 2028 for existing tenancies and by 2030 for all other properties. Upgrading of the property should be factored in as the value may be affected in the future if this is not carried out or an appropriate exemption cannot be obtained.
EPCs are valid for 10 years. Make sure your residential property has a sufficient energy rating that can help you improve your building.
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