Provided you have owned your flat for at least two years (but see Note below) you are entitled to extend your lease for a further 90 years (which is added to the number of years remaining on your existing lease). This is likely to increase the value of your flat and make it a more marketable asset. In addition, the new term of the lease will be at a peppercorn ground rent, i.e. you will not have to pay any further ground rent.
Advice on the premium to be offered to your landlord will be given by your valuer. We will prepare and serve on your landlord a section 42 notice of claim. Your landlord then has two months to respond by serving a counter-notice which will include the premium he is willing to accept.
In addition to the premium, you will also have to pay your landlord’s valuer’s fees and certain of his legal costs.
Up to and including serving the section 42 notice the work carried out by Gregsons will include:
- Receiving instructions, obtaining copy title documents, checking up-to-date details of your landlord and carrying out a company search if necessary.
- Liaising with your valuer with regard to the premium to be offered.
- Preparing the section 42 notice, dealing with signature requirements and effecting service on your landlord and/or any agents or appointed solicitors.
- Making an application to the Land Registry to register the section 42 notice against your landlord’s title in order to protect your interest.
Once your landlord has served his counter-notice, both parties’ valuers enter into negotiations to try and agree a premium which is acceptable to both parties. This is generally possible. However, if an agreement cannot be reached then an application must be made to the First-tier Tribunal (FTT) for them to determine the premium.
During the period of negotiation and in the unlikely event the premium cannot be agreed and it is necessary to make an application to the FTT (which is the exception rather than the rule), our charges will be calculated mainly by reference to the time spent on the matter.
Once the premium for the new lease has been agreed, there will be the additional conveyancing work required in agreeing the remaining terms of the lease, together with completing and registering the new lease. This includes dealing with all HMRC stamping and Land Registry registration requirements.
If more than three flat owners in your building apply to extend their leases at the same time as you, our costs may be reduced depending on the total number of flat owners involved. Should this be the case, then please ask us for details. Clearly if you are interested in extending your lease, it makes sense to talk to your neighbours and fellow flat owners.
Note: If you are considering buying a flat which has a short lease, your seller (provided they have owned the flat for at least two years) can serve a section 42 notice of claim on the landlord on your behalf and then assign the benefit of this notice to you on completion of the purchase. You will then be able to get a new extended lease even though you have not owned the flat for the required two years ownership period.
020 8946 1173