Obtaining a lease extension from your landlord 1. The Law The Commonhold and Leasehold Reform Act 2002 changes the rules when a tenant seeks to enforce their statutory right to obtain a new 90 year lease extension. Significantly, tenants now no-longer need to satisfy a strict residence requirement to qualify under the Leasehold Reform (Housing and Urban Development) Act 1993, (“the 1993 Act”). A summary of the new requirements include the following:- i. You must have owned the lease in question for at least two years; ii. Your lease must be a long lease (a long lease is a lease originally granted for at least 21 years); iii. However, you are not entitled to the new lease if : you have sub-let your lease on a long lease; you have a business lease; your landlord is a charitable housing trust. iv Certain valuation rules and principles must be followed in calculating the price payable for a new lease. The price is : the reduction in the value of the landlords' interests in the flat as a result of the new lease (plus 50% of any marriage value where the original lease is less than 80 years); plus compensation for the granting of a new, longer lease. 2. Can you afford it? Before instructing a solicitor to prepare the notice setting out your statutory right to the new lease, we recommend you firstly instruct a chartered surveyor to value the new lease. If it turns out the valuation prepared is more than you can budget for you will in any event have saved yourself potentially large legal fees for the preparation of an (unnecessary) notice. The valuation will give the price for the new lease and should also provide guidance on what figure(s) to propose as the price payable to your landlords in initial without prejudice negotiations or to include with any statutory notice. Ask your chartered surveyor whether or not he or she will be able to carry out negotiations for you with the landlord’s valuer to settle the final premium payable for the new lease should a notice eventually be served. If you do not want to go to the expense of arranging your own independent valuation, contact your landlord/managing agents to find out whether they already have in place a standard procedure for tenants in your building to obtain lease extensions. It may be that you never have to go to the expense of asking a solicitor to prepare any notice setting out your rights to the new lease because the matter is dealt with by the landlord on a voluntary and reasonable basis. 3. Instruct a solicitor When you have either agreed a value already with your landlord, or had a valuation carried out instruct a solicitor to represent you. Where you have either not agreed the price nor contacted your landlord we first will check to ensure you qualify for the statutory right to the new lease extension. Next, if appropriate we will correspond with your landlords on a without prejudice basis to request a lease extension. It is sometimes possible to agree the new lease and the price payable on a voluntary basis without the need for formal notice to be served. This will save you time and costs. The landlord may however refuse to voluntarily grant a lease extension and no negotiated settlement is achievable. We would therefore prepare the notice setting out your statutory right to the new lease and serve this on your landlord. Once the notice has been given, the landlord’s legal and valuation costs become your responsibility. Even if no notice is actually given and the new lease is granted on a voluntary basis, it is usual to pay for the landlord’s costs. For further information please do not hesitate to contact Chris Phillips or Vivienne Haynes at the office on 020 7841 0123

back