- Extending the lease of a leasehold property
- How our Property Litigation Team can help
- Qualifying for a lease extension
- The procedure for extending a lease
- The landlord’s response
- Procedure following the date allowed for the landlord`s reply
- Why Work With Our Property Litigation Team
- Myerson Property Portal
- Residential Lease Extensions Case Studies
- Our Property Litigation Team
- Contact Myerson Solicitors
- Latest Myerson Property Litigation News
Extending the lease of a leasehold property
The Leasehold Reform, Housing and Urban Development Act 1993 (the 1993 Act) gives the leasehold tenants of flats the right to acquire a new lease on the payment of a premium subject to the fulfilment of the statutory criteria (the Formal Route) or by asking the freeholder to negotiate a new lease (the Informal Route). The exercise of this right is more commonly known as a lease extension
Under the informal route, a leaseholder can approach the freeholder to ask whether they will negotiate a lease extension.
There is no obligation on the freeholder to respond or even agree to the lease extension. If the freeholder does agree, the parties will negotiate.
Starting the process informally could save time and money.
However, there are risks with going down this route, as the freeholder may only agree to extend the lease by including onerous terms in the lease or for a high premium.
Under the formal route, which will be described further below, offers more protection for a leaseholder. However, there is a procedure and strict timescales that must be followed.
The right under the formal route is to add 90 years to what is left on the existing lease at a ‘peppercorn rent’, which means that no ground rent is paid.
However, the landlord is entitled to a premium for extending the lease, which is based on a formula set out in the 1993 Act.
How our Property Litigation Team can help
- Draft and serve or advise on the validity of the initial notice and any counternotice
- Issue and advise you on your claim to extend your lease or purchase the freehold of your house
- Document the extension or purchase of the freehold
Qualifying for a lease extension
The right to extend your lease depends on you meeting certain conditions.
To be a qualifying leaseholder
It must be a long lease, originally for a term of more than 21 years, which you must have held the lease for the past two years (the right can be assigned if you are looking to sell the property).
The procedure for extending a lease
The procedure for extending your lease is set out in the 1993 Act and it has strict timescales.
The first step would be to serve a section 42 notice.
However, to do this you will need to have instructed a surveyor to determine the valuation as a valuation needs to be included in the notice.
Once the section 42 notice has been served, it has the consequences of you not being able to serve another notice whilst that one is in force.
If the notice is withdrawn, no further notice can be given for a period of 12 months.
You (and any joint leaseholders) should sign the notice.
Case law has suggested that you can authorise an agent to sign the notice.
You can serve the notice in person or post it to the landlord’s last known address in England and Wales.
The landlord’s response
The landlord must serve a notice in reply within not less than 2 months after service.
This is referred to as a counter-notice.
Any landlord has the right to access the flat for valuation purposes and they may require the tenant to pay a deposit and/or deduce title.
The landlord can ask for a deposit of greater than £250 or 10% of the premium or other sums payable as proposed in the tenant’s notice.
Procedure following the date allowed for the landlord`s reply
If the landlord admits your claim in the notice in reply, the procedure to follow is governed by the regulations, which set out the conditions of sale. These apply as well as the negotiations to agree the price. If the price and terms are not agreed between 2 months and 6 months after the service of the counter-notice either party may apply to the First-Tier Tribunal for determination. The fee for applying to the tribunal is £100, and the hearing fee (once you receive notice of a hearing date) is £200.
The tribunal’s decision becomes final after 28 days. If you do not agree with the tribunal’s decision, you can appeal to the Upper Tribunal (Lands Chamber) before the decision becomes final, but only if you have the tribunal’s permission. After the tribunal’s decision becomes final, you and the landlord have two months to enter into the new lease and if you do not enter into the new lease within two months of the tribunal’s decision becoming final, you have a further two months to apply to the court to order the landlord to meet their obligations.
Why Work With Our Property Litigation Team
- We have been ranked as a top-tier law firm by the Legal 500 for the last seven years.
- You will have access to more than 30 property experts across the Myerson Property Group, including commercial property, construction, residential property conveyancing and development.
- You will receive city-quality commercial property legal advice at regional prices.
- We provide a partner-led service to ensure you receive the best legal advice and commercially-minded support.
- We have a large team which is capable of meeting your deadlines.
- We understand that each transaction is bespoke to your individual circumstances and that you need support from a property lawyer who is experienced in dealing with a wide variety of clients and types of work.
- We are a full-service law firm operating from a one-site office, which means our teams communicate effectively and efficiently.
- We use the latest technology to ensure that we are working as efficiently as possible and that geographical distance is no bar to us from providing excellent client service.
- We were the winners of ‘Property Team of the Year 2021’ at the Manchester Legal Awards.
- We provide free newsletters and webinars to all our clients to keep you up to date with the real estate sector and changes in the law. Watch our latest property update webinar here.
- Take a look at the Myerson Promise for further benefits of working with us here.
Myerson Property Portal
With the Myerson Property Portal, you gain a competitive edge in the rapidly evolving property landscape.
Our free portal will help you manage your properties with ease and efficiency by providing a seamless service wherever you are.
Not just a management tool, it's an essential companion for the modern investor seeking to optimise their portfolio while staying updated on the latest in the property world.
So, what are the benefits?
- Your own client area, giving you access to all your legal documents, conveniently accessible anytime, anywhere!
- Key legal information at your fingertips.
- Must read property news, blogs and videos.
- Access to free property events and training workshops.
- A comprehensive collection of helpful property documents and guides.
Residential Lease Extensions Case Studies
Client Intro: Owner of residential property
Our client has a long leasehold interest in a residential property. They instructed us to use the statutory procedure under the Leasehold Reform Housing and Urban Developments Act 1993 (as amended), Part 1, Chapter II, Section 24 to extend the lease.
An agreement was reached and the lease was extended.
Client Intro: Purchaser of residential property
Our client was buying a long leasehold interest in a residential property. The lease was coming close to having less than 80 years on it (at which point it become difficult to obtain a mortgage) and, if our client purchased the property, they would have to wait two years before they could initiate a lease extension. Therefore, it was agreed that the seller would serve a section 42 notice and would assign the benefit of that notice to our client as part of the purchase of the property. We prepared the notice, assignment and documented the extension once it had been agreed.
Our Property Litigation Team
Home-grown or recruited from national, regional or City firms. Our specialists are experts in their fields and respected by their peers.
Laura is a Partner and Head of our Property Litigation Team
Karen is a Senior Associate in our Property Litigation Team
Jennifer is an Associate in our Property Litigation Team
Vikki is a Solicitor in our Property Litigation Team
Contact Myerson Solicitors
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