Dispute Resolution solicitor, Naomi Baker, works closely with members of our Residential Property team and specialises in statutory lease extensions, with experience of acting for both landlords and leaseholders.
Leases on flats can be extended either by agreement with the landlord – in which case the length of the new term and the premium and ground rent to be paid are a matter for negotiation between landlord and leaseholder – or as of right by following the statutory procedure set out in the Leasehold Reform, Housing and Urban Development Act 1993 (the Act). Under the Act a leaseholder who has been the registered owner of a leasehold flat for at least two years can claim the right to extend the lease by 90 years in addition to the remaining term, and get rid of the ground rent at the same time, as the new ground rent will be a “peppercorn”, effectively zero.
There are pros and cons with each of the two procedures described above. Generally a landlord may prefer to extend the lease by agreement and preserve his right to receive ground rent. If the landlord keeps his ground rent the premium to be paid by the leaseholder is likely to be less than if the ground rent is effectively extinguished by the statutory procedure.
The leaseholder may not want to extend the lease by as many as 90 years, in which case a negotiation with the landlord for a shorter extended term and lower premium may be preferable.
A landlord may be willing to extend the lease by longer than 90 years, but the premium will reflect the longer term granted. Unfortunately many leaseholders are unable to communicate with their landlord, let alone negotiate with them, and some corporate landlords will insist on the statutory procedure being followed even if they have already indicated the premium they are willing to accept for an extended lease.
Before embarking on the statutory procedure it is important to get expert legal and valuation advice because once a notice of claim has been served on the landlord the leaseholder is legally liable to pay the landlord’s reasonable costs, whether or not the process completes. Because the Act dictates strict deadlines which must be followed by both landlord and leaseholder the statutory process cannot be dragged out, as can some informal negotiations, but those deadlines do mean that the statutory procedure is fraught with potential difficulties.
Whether you are a freeholder who would like to know more about this subject generally, a landlord who has received a notice of claim from a leaseholder and would like specific advice, or a leaseholder looking to extend your lease, Naomi Baker will be pleased to help you. Naomi has experience in acting on lease extensions as well as all other matters relating to leasehold property throughout Essex and will be happy to guide you through the process. She can be contacted on 01206 217035 or by email on firstname.lastname@example.org if you would like to speak to her or make an appointment to see her.
The information on this page relates to leasehold flats. If you own a house on a long lease and cannot afford to buy the freehold you may be entitled to extend the lease by 50 years under the Leasehold Reform Act 1967. There is no premium to be paid to the landlord but your rent is likely to increase.