Should I serve notice or negotiate informally?

by The Chartered Surveyor

Question

I spoke to my Freeholder to enquire the cost to extend my lease and he stated £15,000 to £20,000.

I’ve instructed a surveyor to value the premium and he said the cost would be £7,300 and suggested I make an initial offer of £6,200.  I have received a letter from the Freeholder rejecting this offer and asking me to telephone him.

Should I phone the Freeholder to discuss or should I instruct a solicitor and serve notice?

Answer

It is not uncommon for freeholders to demand somewhat over the odds in informal negotiations, as they are aware that lessees tend to be keen to avoid the accruing the professional fees which accompany perusing the statutory process. It does seem, however, like your freeholder may be rather over-egging the pudding, in this instance.

There is no harm in having a telephone conversation with the freeholder, if you feel confident of being able to stick to your guns. If, however, your freeholder is not willing to negotiate the premium, your only recourse will be to have your solicitor serve notice.

Once notice is served you will become liable for the freeholders reasonable legal costs and surveyor’s valuation fee. However, you will then have recourse to the First Tier Tribunal if your freeholder refuses to agree an acceptable premium. In reality, for a premium of this size the Tribunal appearance is unlikely, as the costs of proper representation would be prohibitively high for both sides. The threat alone of a possible application to the Tribunal will likely be enough to make your freeholder see sense, and reconsider his position.