When the Terms of the New Lease Matter More Than the Price
Dacre House, Chelsea SW3. An £8,000 premium was the easy part. What made the flat saleable at full market value was what the new lease said.
At a glance
- Service
- Statutory lease extension
- Location
- Dacre House, Chelsea, Royal Borough of Kensington and Chelsea, SW3
- Property
- Flat in a purpose-built block
- Landlord
- The Royal Borough of Kensington and Chelsea
- Unexpired term
- 85 years
- Premium
- £8,000
- Outcome
- New lease completed nine months from instruction, with terms negotiated and agreed that put our client in a position to sell at full market value
The premium was not the interesting part
At 85 years unexpired the claim sat comfortably above the 80-year threshold, so no marriage value arose and the premium settled at £8,000. That is a manageable figure and it was never seriously in dispute.
What mattered here was the wording of the lease our client would be left holding.
A statutory lease extension entitles you to a new lease on the same terms as the existing one, with limited exceptions. That sounds like a closed question and it is not. There is room within the process to correct problems, and a landlord willing to engage will frequently agree changes that materially improve what the leaseholder owns — because the landlord’s interest in a well-drafted lease is not opposed to the leaseholder’s.
A claim that secures the right term at the right price and leaves a defect untouched has done two thirds of the job. The premium is paid once. The terms last for the rest of the term.
What "saleable at full market value" actually means
Our client’s objective was not simply a longer lease. It was to be able to sell without a buyer’s solicitor finding something to discount for.
That is a different and more demanding test. A flat can have 175 years on it and still attract a reduced offer, or a nervous lender, because of what the lease says about repair, service charge apportionment, rights of access, alterations or the landlord’s obligations. Buyers do not negotiate on lease length alone; they negotiate on whatever their solicitor raises in the report on title.
The terms were negotiated and agreed as part of the claim, and the effect was that our client could go to market on the same footing as any other flat in the building rather than explaining a problem to every prospective buyer.
The practical point. Ask what the new lease will say, not only what it will cost. If you know you will sell within a few years, the terms are worth more attention than the last thousand pounds of the premium.
Acting against a borough council
The Royal Borough of Kensington and Chelsea was the freeholder. As with any local authority landlord, the shape of the process is set by their internal procedures and precedent documents rather than by the negotiation, and nine months from instruction to completion reflects a claim that anticipated those steps rather than discovering them.
Councils are also, in our experience, more receptive than private investor landlords to sensible drafting amendments, because they hold large numbers of leases in the same building and have no commercial interest in inconsistency between them. That is worth knowing before deciding what to ask for.
We act against every London borough council regularly, alongside the major private estates and housing associations.
When this applies to you
Extending with a sale in mind
If you are extending because you intend to sell, say so at the outset. It changes what is worth negotiating.
A claim run purely on price gets you the cheapest premium. A claim run with a sale in view gets you a lease a buyer’s solicitor will report on without qualification — which is usually worth considerably more than the difference.
Common questions
Can I change the terms of my lease when I extend it?
To a degree. The statutory right gives you the existing terms with limited modifications, but there is scope to correct problems, and a landlord willing to engage will often agree changes. At Dacre House the terms agreed were what allowed the flat to be sold at full market value.
Why does the premium seem low compared with other claims?
Because at 85 years unexpired no marriage value was payable. Below 80 years it is, and the premium rises sharply. The unexpired term is the single biggest driver of cost.
Will extending my lease make my flat easier to sell?
Usually, though lease length is only one of the things a buyer’s solicitor reports on. Repair obligations, service charge apportionment and rights of access all affect what a buyer will pay, which is why the terms are worth attention as well as the term.
What does a statutory lease extension cost in fees?
From £1,750 plus VAT and disbursements for straightforward claims where the unexpired term is above 80 years and there are no third parties. Disbursements are third-party costs such as Land Registry fees, bank charges and identity checks.
Client names are not used in our case studies. Properties are identified by road, block and postcode only. Every matter turns on its own facts, and outcomes described here are not a prediction of what will happen in yours.