Residential Lease Extensions

If you own a flat, maisonette or apartment on a long lease, the value will reduce as the term granted by the lease also reduces.

If you are unable to agree to a residential lease extension with your landlord (usually the freeholder), subject to satisfying certain qualifying criteria, or if you have owned your property for 2 years or more, you will have the right under the Leasehold Reform, Housing and Urban Development Act 1993 (“the Act”) to apply for a ‘statutory’ lease extension. For further guidance and advice on the law on Lease Extensions check out our guide or find out more on the procedure details.

How to get a statutory lease extension?

Upon agreeing on a premium, your landlord will have to extend the lease by adding a period of 90 years to the term remaining under your current lease, and reduce any ground rent that may be payable to a peppercorn (small cash payment or other consideration).

The premium which should be offered to your Landlord will be calculated by a leasehold valuer, based on a formula set out in the Act. This premium is very much a matter for negotiation but the valuer will recommend how much should be offered, as well as provide both a best and worst-case scenario.

The statutory lease extension process

Once a valuation for your residential lease extension has been carried out, the statutory process will begin by the service of a ‘Tenants Notice’ in a form prescribed under the Act (“the Notice”), in which the offer is put forward to the landlord.

At this stage, you should be aware that you will become liable, not only for your own valuation, legal costs, VAT and any disbursements (payments to a third party i.e. the Land Registry for a copy of your title and current lease), but you’ll also become liable for the reasonable valuation fees and legal costs plus VAT incurred by your landlord, whether or not the matter proceeds to completion. You will also be required to pay an initial deposit equal to 10% of the premium offered in the Notice, or £250, whichever is the higher.

Counter-notices from landlords

The landlord must issue a counter-notice at least 2 months from the date of receiving the Notice, either accepting the premium offered or alternatively rejecting this and making a counter offer of their own.

If a counter-notice is not served by the Landlord within the prescribed time, you may apply to the court within 6 months of the date when a counter-notice should have been received, for a vesting order which the court will grant on the terms proposed in the Notice.

If a counter-notice has been received your valuer and your landlord’s will negotiate to agree upon a premium between the two parties. You or the landlord can apply to the Tribunal for a decision, but the application must be made no sooner than 2 months from, but within 6 months of, the date the counter-notice is served.

For further useful information and legal guidance, you may wish to visit the government-funded independent lease advice website. If you require any assistance with your residential lease extension, get in touch with an expert member of our leasehold solicitor team on 01202 525333 or by sending us an email enquiry.