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Our lease extension solicitors explain how to negotiate a lease extension.

by Raminder Uberoi — Posted on 28 August, 2023

Our lease extension solicitors  explain the lease extension process

Requesting a Lease Extension through your Landlord

You, or our lease extensions solicitors, can obtain a lease extension by seeking an informal lease extension from your landlord, or alternatively by serving a Section 42 Notice on them if you are eligible. The key differences between these options are:

Informal Lease Extension

With an Informal lease extension, you and your landlord can negotiate the premium payable, the terms of the extended lease and the number of years by which the lease is to be extended. This route is available to leaseholders who are not eligible to serve a Section 42 Notice onto the freeholder and for leaseholders who also co-own the freehold with other leaseholders. Find out more about negotiating an informal lease extension. 

Lease Extension by way of a Section 42 Notice

This is considered the Statutory route. In order to serve a Section 42 Notice onto your freeholder, you will need to have owned the lease for a minimum of two years, and the premium payable for the lease extension will be calculated based on a formula set out in the Leasehold Reform Act 1993. By serving a valid Section 42 Notice, the lessee has the right to extend their lease by 90 years and for ground rent to be reduced to a peppercorn rate.

If you opt to negotiate directly with the competent landlord (or their lawyer) then your lease extension solicitor will be required to draw up the terms of the lease extension and ensure it is signed by both parties.

In other words, you will need your lease extension solicitor to obtain the signature of the competent Landlord to complete the agreed renewal of the lease. You will also normally require a Valuer to extend the lease.

The role of Lease Extension Solicitors

We, the Solicitors will normally:

  • Prepare the required information for the application.
  • Serve the Notice on the competent landlord and copies to other landlords.
  • Respond to landlord’s requests for information to support the claim.
  • Deal with conveyance of the new lease.

Extending a Lease with a mortgage

If you wish to carry out a lease extension on your  property whilst you have a mortgage you will need the consent of your lender. This is to ensure that the money they have lent you is protected. The lender will give their consent for the lease extension by signing a Deed of Substitution, also known as a Deed of Substituted Security. This essentially “moves” your mortgage from your old lease to your new lease, as your new lease counts as a different title to the old one.

It is also worth noting that lenders will only deal with solicitors who are on their conveyancing panel. Starck Uberoi are on the Conveyancing Panel for most banks and building societies. This means that we are able to assist you in obtaining the consent of your lender for a lease extension, via a Deed of Substitution.

You may also need a deed of substituted security when splitting the title of your property: for example, if you split a house into self-contained flats but intend to live in one of them, you would need to move your residential mortgage onto only the flat you are going to live in. You can read more about this in our blog on Splitting Property into Flats.

Time Frame for arranging a Lease Extension

It should take approximately 3 months for your lease extension to be finalised if you are arranging your lease extension directly through your landlord, or your landlord’s solicitor.

If you are looking to take the statutory route for securing your lease extension then visit our blog on Serving a Section 42 Notice for more information.

The role of the Valuer

Prior to the lease extension the Valuer will:

  • Provide the “best and worst” case valuation.
  • Advise on the amount of the offer to be made in the Notice.
  • Negotiate an agreed settlement of the premium payable for the new lease. This includes representation at the Tribunal, in the event we are required to issue a claim.

Importance of obtaining a Valuation from a Chartered Surveyor

Legislation does not formally require a full valuation for an application for a new lease. However, it is strongly recommended that you do not proceed without proper valuation advice from a Chartered Surveyor. This advice should be provided to you early on from a Surveyor with a strong understanding of legislation and the property market.

Valuation is far from an exact science, and it will be virtually impossible for the Chartered Surveyor to provide an accurate estimation of the eventual settlement figure. However, your Chartered Surveyor should be able to provide a “best and worst” figure, valuing from both the leaseholder’s and the landlord’s perspective. In addition, the Surveyor should be able to anticipate areas of claim and counter-claim by using their local experience with London properties.

There is no such thing as a fixed price for a new lease. You should be aware, from the beginning, of the likely range within which the price will be settled, so as not to be surprised at a later stage. We can recommend a London Surveyor we have worked very closely with in the past for lease extensions, if required.

In considering the likely premium you should also bear in mind the leaseholders’ liability for the landlord’s costs. The eventual cost of the new lease will be the premium, plus both your own and the landlord’s agreed legal and valuation costs. This is excluding any costs which are incurred in connection with proceedings before a Tribunal.

How Starck Uberoi can help

Our experienced lease extension solicitors will deal with your matter efficiently, and negotiate to ensure you get the best possible premium.

For more information please visit our Conveyancing page. For an appointment at any of our offices, email us at solicitor@starckuberoi.co.uk or call 0208 840 6640. Our offices are based in Ealing, Brentford, London Belgravia and Canterbury, all within easy reach by public transport. Our partner, Raminder Uberoi, can also provide a Notary Public Service at any of our London offices.

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About Raminder Uberoi

Raminder is head of the property department and his practice includes acquisitions, sales, financing, planning, development, landlord and tenant matters and corporate-related property transactions. He specialises in all aspects of commercial and residential property continually developing successful and practical client-focussed strategies. He draws on his wide experience to achieve tailor-made solutions for his clients’ commercial and financial needs.