Question 1

Negotiating Lease Extensions

Accepted Answer

We would like to know if the Freeholder can refuse to deal with the person who is appointed to deal with lease extension negotiations on behalf of the Leaseholder on the basis that they are not a qualified Solicitor or Surveyor? As the Managing Agent for the development, I have been asked by 8 Leaseholders to negotiate lease extensions with our Freeholder. This is something I have done personally before on 4 of the flats I own and I have also assisted the original surveyor and solicitors on about 4 more of these recently. In the early days we served the Section 42 notices and engaged in negotiations with the Freeholders Surveyor. But recently we have extended the lease by mutual consent and the freeholder has given fairly reasonable rates which has meant we have not had to serve any S.42 notices. The Freeholder is now refusing to deal with me on the basis that I am not a "qualified professional" despite the fact that I hold written authority from the flat owners to deal with the Freeholder on their behalf. Are they entitled to do this? They are also objecting to me charging the leaseholders for my services (£500) despite the fact that they are insisting that the leaseholders pay their solicitor £900 for the privilege of preparing the "new lease" which is just a photocopying exercise! I am making a charge to the freeholders to do this for them and because I have dealt with all the lease extensions previously I know how much has been charged and can tell if the price offered is reasonable thus being in a unique position to protect their interests and reduce their costs. Interestingly the previous lease extensions last year have been about £9500 however now the freeholder is now demanding £12000 on the basis that there is a "rising market" despite prices only moving about £10000 upwards this year on a £125 000 flat. They are also refusing to disclose any working out for the higher renewal prices offered. I obviously do not agree with this hike in renewal charges but the freeholders attitude has been that it is non negotiable and "take it or leave it", which will mean we would be likely to have to serve a S.42 notice and incur extra costs, however I think that the potential savings would possibly outweigh the costs of the notice. I would be interested to hear your opinion on this matter... The FPRA responds: We are not aware of any specific reason why the Freeholder would be able to refuse to deal with someone who is not a Solicitor or a Surveyor in relation to Lease Extension negotiations. However, unless the process is on a statutory footing or negotiation is voluntary. If a Section 42 Notice is served then the Landlord will need to negotiate as otherwise you will need to apply to the Tribunal in the event that matters cannot be agreed. Whilst it might be possible if the flat owners are represented at the hearing by a Solicitor or Surveyor I would anticipate the Tribunal will allow the flat owner in person and/or someone to act as an "Mackenzie friend" to that person in the hearing. You mentioned an objection from the Freeholder to you charging the Leaseholders for your services (providing you are not holding yourself out as the solicitor or valuer then there is no legal reason why this cannot be done). However I am curious as to why the Freeholder is aware of this arrangement as ultimately surely this is between you and the Leaseholders. You mention the negotiated prices which have increased recently, perhaps because of market conditions. Ultimately, where a deal is voluntary the Freeholder is not obliged to disclose any information relating to this. There is no statutory obligation to disclose the working out. It may be more productive to proceed by way of service of Section 42 Notices in such a situation. If you or the Leaseholders would like this firm to assist in any way by all means please do get in contact so we can discuss this further.

Question 2

Negotiating Lease Extensions

Accepted Answer

We would like to know if the Freeholder can refuse to deal with the person who is appointed to deal with lease extension negotiations on behalf of the Leaseholder on the basis that they are not a qualified Solicitor or Surveyor? As the Managing Agent for the development, I have been asked by 8 Leaseholders to negotiate lease extensions with our Freeholder. This is something I have done personally before on 4 of the flats I own and I have also assisted the original surveyor and solicitors on about 4 more of these recently. In the early days we served the Section 42 notices and engaged in negotiations with the Freeholders Surveyor. But recently we have extended the lease by mutual consent and the freeholder has given fairly reasonable rates which has meant we have not had to serve any S.42 notices. The Freeholder is now refusing to deal with me on the basis that I am not a "qualified professional" despite the fact that I hold written authority from the flat owners to deal with the Freeholder on their behalf. Are they entitled to do this? They are also objecting to me charging the leaseholders for my services (£500) despite the fact that they are insisting that the leaseholders pay their solicitor £900 for the privilege of preparing the "new lease" which is just a photocopying exercise! I am making a charge to the freeholders to do this for them and because I have dealt with all the lease extensions previously I know how much has been charged and can tell if the price offered is reasonable thus being in a unique position to protect their interests and reduce their costs. Interestingly the previous lease extensions last year have been about £9500 however now the freeholder is now demanding £12000 on the basis that there is a "rising market" despite prices only moving about £10000 upwards this year on a £125 000 flat. They are also refusing to disclose any working out for the higher renewal prices offered. I obviously do not agree with this hike in renewal charges but the freeholders attitude has been that it is non negotiable and "take it or leave it", which will mean we would be likely to have to serve a S.42 notice and incur extra costs, however I think that the potential savings would possibly outweigh the costs of the notice. I would be interested to hear your opinion on this matter... The FPRA responds: We are not aware of any specific reason why the Freeholder would be able to refuse to deal with someone who is not a Solicitor or a Surveyor in relation to Lease Extension negotiations. However, unless the process is on a statutory footing or negotiation is voluntary. If a Section 42 Notice is served then the Landlord will need to negotiate as otherwise you will need to apply to the Tribunal in the event that matters cannot be agreed. Whilst it might be possible if the flat owners are represented at the hearing by a Solicitor or Surveyor I would anticipate the Tribunal will allow the flat owner in person and/or someone to act as an "Mackenzie friend" to that person in the hearing. You mentioned an objection from the Freeholder to you charging the Leaseholders for your services (providing you are not holding yourself out as the solicitor or valuer then there is no legal reason why this cannot be done). However I am curious as to why the Freeholder is aware of this arrangement as ultimately surely this is between you and the Leaseholders. You mention the negotiated prices which have increased recently, perhaps because of market conditions. Ultimately, where a deal is voluntary the Freeholder is not obliged to disclose any information relating to this. There is no statutory obligation to disclose the working out. It may be more productive to proceed by way of service of Section 42 Notices in such a situation. If you or the Leaseholders would like this firm to assist in any way by all means please do get in contact so we can discuss this further.

Negotiating Lease Extensions

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