What are Lease Extensions?
- Under LRHUDA tenants can request a new lease of 90 years plus the remainder of their current ones at a peppercorn rent (a very insignificant amount of rent).
- A premium must be paid to the landlord (the freeholder) for the loss of rent on their current lease and for being kept out of the property for the additional term.
- The premium is based on the property value and terms of the existing lease including how much time is left.
- Under the statutory process, it is largely only for flats (a separate set of premises which forms part of a building, and which is constructed or adapted for use for the purposes of a dwelling, and either the whole or a material part of which lies above or below some other part of the building).
Being aware of the lease extension process is crucial for property owners (whether they are freeholders or leaseholders) and the ownership of property in a building which the process applies means you may be required to participate in the process of the extension. The benefits of knowing your rights in this respect are:
|For Freeholders||For Leaseholders|
|· Need to know the process if a leaseholder exercised there right to get a lease extension|
· Have to serve a counter notice or face legal action
· Know your rights such as adding a right to develop clause
· Potentially receive a large amount of money as a lump sum
|· Could have financial benefits|
· More secure future
· Can provide much cheaper rent although at a cost to premium paid
· Increases chances of receiving a loan over the property
· Save money in the long-term if wishing to stay in flat for a long time
Do I qualify for a Lease Extension?
A lease extension sounds favourable if you’re a leaseholder but there are still certain criteria that need to be satisfied for you to qualify:
- Have the flat under a long lease (over 21 years);
- Must be the legal owner for two or more years;
- Potential complications if the remaining term of the lease is less than 80 years; and
- Applies to residential dwellings only.
What is the process of a Statutory Lease Extension?
Our Solicitors have been recognised for excellence in this field by clients and other professionals to become members of the Association of Leasehold Enfranchisement Practitioners. Should you seek advice and assistance in coordinating a lease extension (either as a freeholder or leaseholder) they will help you by:
- Checking you are able to qualify;
- Resolving any issues if a party is not participating or otherwise absent from the management of the building;
- Assist you with getting the property valued for lease extension purposes;
- Carry out the required notice preparation and advising you of the implications from producing or receiving such a notice;
- Help you manage the statutory timetable for agreeing terms of acquisition and settling points of dispute;
- Work with the other party to agree a form of lease and proceed to completion; and
- Keep you informed throughout the process of your rights and what may be required if one party is not complying thereby protecting your interests.
Who to Contact
Separate to Statutory Lease Extensions, you can agree to a voluntary process for achieving the same result with the other party. There is less room to negotiate in these situations but if the parties are commercially minded it may make more sense to explore such options. Naomi Jones, the Head of our Property and Probate Department can advise you as to what may be available in your circumstances, or please contact Peter Thibault in our Dispute Resolution Department with any general queries.
Alternatively – please see our listing on the Association of Leasehold Enfranchisement Practitioners.