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Retrospective Freeholder Consent: Negotiate, Indemnity Insurance or Extend Lease?
I've got a long-leasehold flat in a converted building. Unfortunately I get on pretty badly with the freeholder. I've also extensively renovated the flat without freeholder consent. Some of these changes (e.g. removal of walls, rewiring) definitely breach the lease without consent, and may even be outright forbidden. But it was all done properly in terms of the work, and signed off by Building Control.
I'd now like to sell the flat, and I know I have to be honest with potential buyers about the changes and lack of permission if they ask (which pretty much any conveyancer will, I think). I've copied out the relevant clauses from my Lease at the bottom.
So, yes, now I wish I'd asked beforehand, of course. But I didn't. I'd be really grateful for any advice on pluses and minuses of what I see as my three options:
1) ASK THE FREEHOLDER FOR RETROSPECTIVE CONSENT BEFORE PUTTING FLAT ON THE MARKET
I have to assume the Freeholder will use this as a chance to extract as much money from me and make my life as difficult as possible. So my question is: how expensive and difficult is that? Can he charge me a fee for the consent per se, or is it just a case of how many solicitors and surveyors he can hire? Could I expect to do it for under 2000 pounds? Do Freeholders ever insist on putting the property back to the original condition? Do I have to get really specific permissions for all the changes, or would a statement like "the freeholder is content with the state of the property as of April 2017" suffice?
2) OFFER POTENTIAL BUYERS INDEMNITY INSURANCE
This is definitely the cheapest option (few hundred pounds I've heard) and avoids having to tango with the freeholder. Freeholder is very disinterested in the building (source of some of the friction over the years!) so I can say in good faith that the chances of the freeholder taking any action are very low. But will buyers settle for this? And if they do, will they use it as a reason to lower their offers by more than the cost of getting permission? I am considering selling and renting rather than trying to sell and buy in a chain.
3) EXTEND THE LEASE
Someone suggested if I extended the lease, this would include acceptance of my alterations. But if I'm currently in breach of lease (unconsented alterations), am I still entitled to a statutory extension? Also, my current lease has 100+ years left so nobody would bother extending the lease for its own sake at this point. Will a freeholder's solicitor smell a rat? Any other plausible reason I might want to extend now? The lease document includes a floor plan, which is clearly different to property now. How would I broach "updating" the floor plan in the new lease? Some alterations would be covered by "not to unreasonably withhold or delay consent", but some may be outright forbidden. If this collapsed into a consent negotiation, would this mean freeholder could charge pretty much any premium for consent/variation? Lease extension premium estimated by the calculator on lease-advice.org as £1000-£2000. Any idea roughly how much in everyone's professional fees I'd be looking at on top of this?
I know I've made a bit of a pigs' ear of it by not getting the permissions in advance. But I'd like to dig myself out of the hole that'd be great. I'm sure a solicitor could pursue any one of these options competently but I'd really value some more tactical advice between the various options.Thanks!
RELEVANT LEASE TERMS
"Not to make any internal, non-structural alteration or addition to the Property, or alteration to the plan, design or elevation of the Property without the prior written consent of the Landlord, such consent not to be unreasonably withheld or delayed.
Not to install, alter the route of, damage or remove any Service Media at the Property, without the prior written consent of the Landlord, such consent not to be unreasonably withheld or delayed."
"To pay to the Landlord on demand the costs and expenses (including any solicitors', surveyors' or other professionals' fees, costs and expenses and any VAT on them) properly assessed on a full indemnity basis incurred by the Landlord acting reasonably (both during and after the end of the Term) in connection or in contemplation of [...] any consent applied for under this lease, whether or not it is granted (except to the extent that the consent is unreasonably withheld or delayed by the Landlord in circumstances where the Landlord is not entitled to unreasonably withhold or delay consent)."
I'd now like to sell the flat, and I know I have to be honest with potential buyers about the changes and lack of permission if they ask (which pretty much any conveyancer will, I think). I've copied out the relevant clauses from my Lease at the bottom.
So, yes, now I wish I'd asked beforehand, of course. But I didn't. I'd be really grateful for any advice on pluses and minuses of what I see as my three options:
1) ASK THE FREEHOLDER FOR RETROSPECTIVE CONSENT BEFORE PUTTING FLAT ON THE MARKET
I have to assume the Freeholder will use this as a chance to extract as much money from me and make my life as difficult as possible. So my question is: how expensive and difficult is that? Can he charge me a fee for the consent per se, or is it just a case of how many solicitors and surveyors he can hire? Could I expect to do it for under 2000 pounds? Do Freeholders ever insist on putting the property back to the original condition? Do I have to get really specific permissions for all the changes, or would a statement like "the freeholder is content with the state of the property as of April 2017" suffice?
2) OFFER POTENTIAL BUYERS INDEMNITY INSURANCE
This is definitely the cheapest option (few hundred pounds I've heard) and avoids having to tango with the freeholder. Freeholder is very disinterested in the building (source of some of the friction over the years!) so I can say in good faith that the chances of the freeholder taking any action are very low. But will buyers settle for this? And if they do, will they use it as a reason to lower their offers by more than the cost of getting permission? I am considering selling and renting rather than trying to sell and buy in a chain.
3) EXTEND THE LEASE
Someone suggested if I extended the lease, this would include acceptance of my alterations. But if I'm currently in breach of lease (unconsented alterations), am I still entitled to a statutory extension? Also, my current lease has 100+ years left so nobody would bother extending the lease for its own sake at this point. Will a freeholder's solicitor smell a rat? Any other plausible reason I might want to extend now? The lease document includes a floor plan, which is clearly different to property now. How would I broach "updating" the floor plan in the new lease? Some alterations would be covered by "not to unreasonably withhold or delay consent", but some may be outright forbidden. If this collapsed into a consent negotiation, would this mean freeholder could charge pretty much any premium for consent/variation? Lease extension premium estimated by the calculator on lease-advice.org as £1000-£2000. Any idea roughly how much in everyone's professional fees I'd be looking at on top of this?
I know I've made a bit of a pigs' ear of it by not getting the permissions in advance. But I'd like to dig myself out of the hole that'd be great. I'm sure a solicitor could pursue any one of these options competently but I'd really value some more tactical advice between the various options.Thanks!
RELEVANT LEASE TERMS
"Not to make any internal, non-structural alteration or addition to the Property, or alteration to the plan, design or elevation of the Property without the prior written consent of the Landlord, such consent not to be unreasonably withheld or delayed.
Not to install, alter the route of, damage or remove any Service Media at the Property, without the prior written consent of the Landlord, such consent not to be unreasonably withheld or delayed."
"To pay to the Landlord on demand the costs and expenses (including any solicitors', surveyors' or other professionals' fees, costs and expenses and any VAT on them) properly assessed on a full indemnity basis incurred by the Landlord acting reasonably (both during and after the end of the Term) in connection or in contemplation of [...] any consent applied for under this lease, whether or not it is granted (except to the extent that the consent is unreasonably withheld or delayed by the Landlord in circumstances where the Landlord is not entitled to unreasonably withhold or delay consent)."
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