Thirsk Winton LLP

Extending your lease

Extending your lease can be vital to ensure your flat remains mortgageable and marketable.

We have particular expertise in this area, which means we can advise you as to the most efficient and cost-effective way of dealing with the problem.

We can also follow up the lease extension by acting on your behalf in a sale of the property, or even deal with a sale of the property whilst the lease is being extended, by transferring the extension process to your buyer to complete.

Why do leases need extending?

Owning a flat/apartment usually means owning a lease of the property, which has a finite term of years.  Often leases are granted for 99 years or 125 years, and if they were first granted a long time ago, the numbers of years remaining might now be getting to a point which is considered low.  At some point, mortgage lenders may refuse to lend on the security of the lease.  This doesn’t just mean the property can’t be mortgaged – it means it cannot be sold easily, since a buyer will often intend to mortgage the property.

Do I just ask my freeholder for a lease extension?

You can do this – it is what we call an “informal negotiated lease extension”.  The problem with this method is that the freeholder is allowed to dictate the terms.  This means they might offer you the very minimum number of extra years, at the highest possible price, with a high ground rent and various changes which suit their purposes but might not appeal to you.  For this reason, we frequently advise our clients to follow the stautory lease extension procedure.

What is the statutory procedure?

To qualify for this process there are a number of criteria, the most relevant of which is that you must have owned the lease for at least two years.  There are other criteria which, whilst important, are nearly always met.  The procedure begins by serving a Section 42 notice on your freeholder.  Within a certain time limit, the freeholder responds with a Section 45 counter-notice and negotiations then commence in order to agree the price.  If the price cannot be agreed by negotiating, it will be determined independently by the Property Chamber of the First Tier Tribunal.  The form of the lease is set by the relevant legislation:

  • The term will be your existing term plus an additional 90 years added on.
  • The ground rent is reduced to zero.
  • The lease otherwise remains the same as before, save for some minor new statutory provisions.

This means the freeholder is not entitled to impose new restrictions or make your lease more onerous than it was before.

What if my freeholder just ignores my Section 42 notice?

You make an application to the County Court.  The court will order that a new lease should be granted on the terms stated in your Section 42 initial notice.  The freeholder must implement the terms of this order – if they do not, a further application is made to actually grant the new lease.  This rarely happens – whether they get involved or not, the freeholder cannot stop you getting your lease extension.  From their perspective, it is better to respond to your notice and therefore remain involved in the process.

What happens if I cannot locate my freeholder?

Again, an application is made to the County Court, this time for an order that:

  • You are entitled to a lease extension
  • You can dispense with the need to serve a notice on the freeholder; and
  • The terms of the new lease shall be determined by the First tier Tribunal

It will be necessary to show the court that efforts have been made to locate the freeholder.  The court will refer the matter to the FTT for a determination of the premium and terms of the lease.  At the conclusion of the matter, the court grants the lease extension and the money is paid into the Court Funds Office, waiting there until one day claimed by the freeholder.

I am interested in proceeding but need to know more.  How do I proceed?

Contact us now and we can talk you through the initial steps and give details of costs.