Lease Extension: Statutory rights Nadeem Hussain Islington Leaseholder event 10 th October 2012

Why extend the lease? Value and marketability diminishes over time Enhance attraction to mortgage lenders Avoid marriage value 80 years rule Freehold purchase may not be possible One flat in building Resident landlord Commercial area is more than 25% Takes too long

Lease Extension Introduced by Leasehold Reform Housing and Urban Development Act 1993 as amended by Commonhold and Leasehold Reform Act 2002 Act The right to a new lease of 90 years plus the existing term at a peppercorn ground rent Price including capitalised ground rent, deferred reversion and marriage value if less than 80 years left on lease

Qualifying tenants Must have owned flat for 2 years Removal of residence test Considered that tenant must be registered proprietor of the lease at HM Land Registry for at least 2 years Lease must have been in excess of 21 years when originally granted

Procedure Prudent to obtain a valuation Serve Tenants’ Notice on landlord Landlord to respond with a counter-notice Application to LVT within 6 months from date of Counter- notice

Serve notice (s42) Specify a premium Specify terms of new lease Personal signature of lessee(s) Give landlord not less than two months to serve counter- notice NB Can transfer benefit of notice when selling flat

Landlord’s rights Can request a deposit The greater of £250 or 10% or premium proposed Right of access To the flat to obtain valuation Enforceable through application to the county court

Counter notice (s45) Admit the claim Deny the claim landlord to apply to the county court within two months of giving counter-notice Redevelopment rights last five years of the term What if landlord fails to serve counter-notice in time? leaseholder to seek vesting order in the county court.

Procedure post – counter-notice Negotiation Between two and six months after counter-notice given either party can apply to LVT to decide disputed terms Failure to apply deemed withdrawal cannot apply for another twelve months and pay landlord’s abortive costs Once terms agreed or decided by LVT move towards completing the new lease within two months(“appropriate period”) If fail to enter into binding lease within the appropriate period another two months to seek vesting order in the county court otherwise deemed withdrawal

Questions? The Leasehold Advisory Service Maple House, 149 Tottenham Court Road London W1T 7BN