Should I pay for my freeholder’s valuation?

by The Chartered Surveyor

Question

I need to extend my lease and have approached my freeholder. He tells me that I have to pay for his surveyor’s valuation before he tells me what it will cost. Is this right?

Answer

As with so many leasehold reform questions – the short answer is ‘no’ with a ‘but’, and the long answer is ‘yes’ with a ‘however’.

As a leaseholder you have the right to a new lease with a term of 90 years in addition to your current unexpired term, and with a new ‘peppercorn’ ground rent. As you are aware, you will have to compensate the freeholder by way of paying a premium.

Technically, to initiate the process, you need to have your solicitor serve a notice on the freeholder under section 42 of the Leasehold Reform, Housing and Urban Development Act 1993. At this stage, you will become liable for the freeholder’s reasonable solicitor’s fees and the cost of his valuation. The notice needs to be accompanied by a suggested premium. To this end, you ought to have your own surveyor value the premium in the first instance.  

This is typically an adversarial process – your surveyor will represent your interests (try to get the lowest premium) and the freeholder’s surveyor will represent his (try to get the highest premium). If the two surveyors, following negotiation, cannot agree the premium you have the option of referring the case to the First Tier Tribunal for determination.

Make no mistake, while you might be paying the fee, unless explicitly stated otherwise, the freeholder’s surveyor’s duty of care is to the freeholder – not you! Furthermore if you have not served notice and followed the correct procedures you will have no right of redress to the Tribunal, and will have no option but to serve notice and restart the process (potentially becoming liable for a new valuation by the freeholder’s surveyor as of the notice date) should you consider the freeholder’s surveyor’s  suggested premium unjust.

My view is that, unless the freeholder is willing to agree to a jointly instructed surveyor to assess the premium on a strictly impartial basis, you should not agree to pay any costs in advance of serving notice and following the statutory procedure.