Guidance for Lease Extensions
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Date Published:11 Mar 2016 Last Updated:24 Oct 2021

Guidance for Lease Extensions

Conveyancing - Residential Property

When a lease has a short term it will become more expensive to extend and could also cause difficulties when you come to sell the property, as mortgage lenders will not want to lend on a short term. This is especially the case if your lease has less than 80 years left to run.

There are two ways of obtaining a lease extension, either by (1) negotiations with the landlord (this can be useful if you have not owned the property for more than 2 years) or (2) by service of a Section 42 Notice. Please note that if you have a mortgage, we will need to obtain consent from the lender.

1. Negotiations with the Landlord

At first you should contact your landlord and request terms for a lease extension, this is likely to include the premium to pay for the lease extension, the term and the ground rent.

It is likely that the landlord will ask you to pay any legal and surveyor’s costs. You should also consider appointing a surveyor to value the premium, to ensure that the premium proposed by the landlord is not too high for the lease extension.

Once terms have been agreed, you will be granted a new lease which will be registered at the Land Registry.

2. Section 42 Notice

If you are unable to negotiate a lease extension with your landlord, then you can serve a Section 42 notice, providing that you are eligible to do so under the Leasehold Reform, Housing and Urban Development Act (LRHUDA 1993).

In summary, you must have owned the property for at least two years and the lease must be a long lease e.g. granted for a term of 21 years or more. (Therefore if you have not owned the property for more than 2 years, you should try and negotiate a lease extension with your landlord instead).

Once we have confirmed that you are eligible, you will need to instruct a surveyor to value the premium of the lease extension. We will then be able to serve a Section 42 Notice upon the landlord setting out the terms of the lease extension.

The landlord then has 2 months to respond by serving a Counter Notice which will either accept or reject the claim and confirm whether or not they are willing to accept the premium proposed in the notice. There is a further 2 month period in which your surveyor can negotiate the premium if there is any disagreement.

If an agreement cannot be reached, then either party is entitled to apply to the Leasehold Valuation Tribunal.

Once terms have been agreed, you will be granted a new lease which will be registered at the Land Registry.

3. Purchasing a property with a short term lease?

As stated above, if you are purchasing a leasehold property with a short term of the lease, you will not have the right to extend the lease until you have owned the property for at least 2 years.

Therefore, we can arrange to ask the seller to assign the benefit of the lease extension on completion of the purchase, without you having to meet the two year ownership eligibility criteria. You will then be able to have a new lease granted from the landlord.

If you have any queries with regards to a lease extension please contact our Residential Conveyancing lawyers on 01202 525333.