A Simple Guide to Extending your Lease
11 December, 2018
The Leasehold Reform Housing and Urban Development Act 1993 gives lessees of flats the right to extend their lease by 90 years in addition to the remaining term at nil ground rent subject to payment of a premium. There are some qualifications criteria including have been registered as owner of the flat for two years before being able to obtain the right.
We recommend that you appoint a valuer who is a member of ALEP so that you know that they are a specialist in dealing with lease extensions. We always recommend that you appoint a valuer as the first step in the process so that you can get an idea of the premium you might expect to pay.
Once you have the report from your valuer we can prepare the Notice to serve on your landlord. That is called a Section 42 Notice and sets out the proposed premium and terms. We will serve that notice on your landlord and any head lessee or third party to the lease. The landlord has two months in which to reply to the notice by way of a Counter Notice. In that time they will need to have their valuation undertaken and so arrangements will need to be made for access for their valuer. They can also ask you to pay a Statutory Deposit which is 10% of the proposed premium and to deduce your Title to the property. We handle all of that for you.
Usually your landlord will agree that you have the right to extend your lease but not the level of premium and so at that point your valuer can start to negotiate with the landlord’s valuer. They have a maximum of six months in which to reach an agreed premium and in that time we also need to agree the new lease terms with the landlord’s solicitor. The law does not allow the parties to change very much in terms of the content of the lease but things might need updating or made compliant for a mortgage lender. Some landlords may want to impose a whole new lease if your existing one is outdated.
If premium and terms have not been agreed by the end of that six month period we will make an application to the First Tier Tribunal which is the body that has the power to determine various issues between landlords and lessees and they have the power to determine the premium, the terms of your lease and the level of costs you should pay to the landlord.
The application is very much a fall back position and most of the time terms will be agreed before it is necessary. However if an application does have to be made then that is usually a trigger for the parties to reach agreement relatively swiftly thereafter, as a lessee is not responsible for paying the landlord’s costs involved in the First Tier Tribunal. If no application is made then the lessee’s notice is deemed to be invalid and is withdrawn, this means that you would not be able to start the process for a further year.
A lessee has to pay the landlord’s reasonable legal and valuation costs and we will negotiate those for you.
It is very important to service Notice before your lease term drops below eighty years otherwise the premium becomes a lot more expensive so if your lease is coming up to eighty years unexpired do get in contact as soon as possible.
At Storrar Cowdry we try to make the process easier for you, we are experienced in doing bulk lease extensions in blocks so if a number of you have short leases we can offer reduced costs.
To understand more about the process or to obtain an estimate please call Jane Canham on 01244 400567.