Subject to satisfying certain qualifying criteria, owners of flats who have owned their property for a period of 2 years are entitled to a lease extension of 90 years plus the unexpired term of the existing Lease.
There is legislation which sets out the process by which the flat owner can acquire the new Lease. A premium will be payable for the new lease and this premium is usually calculated by the qualified surveyor.
If you are in this position and wish to obtain a lease extension, you will require legal advice. Contact our expert Lease Solicitors for guidance.
How can I extend my lease?
It is possible to agree an extension for a new lease informally with your landlord. However, if not, then the Leasehold Reform Housing and Urban Development Act 1993 provides a mechanism for extending or obtaining a new lease.
To qualify under the Act you have to have owned your flat for a minimum of 2 years. Although people refer to “extending” a lease, in reality you will be granted a new lease for a term of 90 years plus the unexpired term of your existing lease.
The ground rent payable under the new lease will be nil but all the other terms of your lease will remain the same.
A premium is payable for the new lease and this is calculated by using the valuation method set out in the 1993 Act. It is a complex procedure and ideally should be carried out by a valuer with the requisite expertise.
The procedure is started by sending a Notice to your landlord claiming the right to a new lease under Section 42 of the 1993 Act. Your landlord has 2 months to send a counter notice in response stating whether the right is accepted and whether the premium is agreed. Usually the premium offered is disputed and the parties’ valuers enter into negotiations. If agreement cannot be reached then an application canto be made to the Property Tribunal to determine the premium.
You will be responsible for your own and your landlord’s reasonable costs of the process.
How much will a lease extension cost?
In addition to the premium to be paid for the new lease, there are additional costs involved in your lease extension. You will be responsible for payment of both your own and your landlord’s solicitor’s and surveyor’s fees. You should allow between £3500 and £4500 to cover these costs.
How long does it take to get a lease extension?
If you are using the statutory procedure then most lease extensions are agreed within 4 to 6 months.
What is a Section 42 Notice?
A Section 42 Notice is the notice sent by a lessee/ tenant to the landlord/freeholder claiming the right to a new lease under the Leasehold Reform Housing and Urban Development Act 1993. The Notice has to contain specific information provided by the Act. The landlord/freeholder has 2 months from service of the Notice to serve a counter notice.