What other costs will I have to pay in addition to the premium for the new lease?

by The Chartered Surveyor

Question

I am applying for a new lease under Section 42 of The Leasehold Reform, Housing and Urban Development Act 1993.  What other costs will I have to pay in addition to the premium for the new lease?

Answer

In addition to the premium you will obviously have to pay your own professional fees, such as valuation fees and solicitors’ fees.  Section 60 of the Act states that the tenant (lessee) submitting a Section 42 Notice will also be responsible for paying certain of the costs incurred by the landlord (freeholder).  These are:-

  • Any investigation reasonably undertaken of the tenant’s right to a new lease.
  • Any valuation of the tenant’s flat obtained for the purpose of fixing the premium or any other amount payable by virtue of Schedule 13 in connection with the grant of a new lease under Section 56.
  • The grant of a new lease under that Section.

This means that effectively the lessee would be responsible for any legal and valuation costs incurred by the freeholder in connection with the grant of the new lease.  The act does say that the costs have to be ‘reasonable’ and goes on to define this further by saying that they ‘shall only be regarded as reasonable if and to the extent that costs in respect of such services might reasonably be expected to have been incurred by him if the circumstances had been such that he was personally liable for all such costs.’

It is worth noting that if agreement cannot be reached between the Landlord and Tenant each party will be responsible for their own costs in attending a Tribunal.

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