We can assist in statutory and voluntary lease extensions, acting for leaseholders in extending the term of years on their lease or acting for freeholders in granting an extension of the term of years on the lease.
There are two ways in which one can obtain a lease extension of their flat.
Voluntary Lease Extension
The voluntary route is taken when the tenant approaches the landlord (or the managing agent if one has been appointed). The landlord may agree to extend their lease without the need for the tenant to serve a formal notice and on what terms e.g. term of years and ground rent and any other variations that may be required to the lease. The landlord is under no obligation to come to a voluntary arrangement but this can sometimes suit both parties.
What it means for Landlords
From the landlord’s perspective, they are sometimes willing to grant a lease extension in this way because they may be prepared to take a lower premium than that which they may get under the statutory lease extension process but in turn seek to retain a ground rent increasing every so many years. Often this is the approach taken by big investor landlords.
Landlords are sometimes willing to grant a lease extension on similar terms as the tenant would be entitled to obtain pursuant to the legislation governing lease extensions i.e. 90 years plus the unexpired term and the ground rent reduced to a peppercorn (£nil from the date of completion of the lease extension).
What it means for Tenants
For tenants this could mean some cost savings on valuation and legal fees in comparison to the formal or statutory route which can often be a much longer process and more costly as it requires more work.
A potential disadvantage to the voluntary route is that the Landlord is not obliged or contractually bound to grant the lease extension and could withdraw at any time (even if the landlord initially engages with the tenant in respect of a lease extension). There is a risk that the landlord could decide not to proceed at any time and the tenant will have lost that time and any money spent negotiating with their landlord without any recourse.
The tenant is usually responsible for their own legal fess as well as the landlord’s legal fees and any valuation fees incurred by both parties.
Formal (Statutory) Lease Extension
The Leasehold Reform, Housing and Urban Development Act 1993 (as amended by the Commonhold and Leasehold Reform Act 2002) (“the Act”) provides a leasehold owner with the right to extend their lease subject to certain criteria, namely that the tenant must have been the registered proprietor for 2+ years. Please note that this date is calculated from the date that the transaction is registered at the Land Registry and not the date the purchase was completed.
The Act provides that the term of the lease shall be 90 years plus the unexpired term and it will reduce the ground rent to a peppercorn (£nil from the date of completion of the lease extension).
This route is governed by a process which has strict timescales and protocols which have to be followed. Often the statutory route is used where the tenant is not able to enter into a voluntary negotiation of lease extension terms with their landlord, or where the landlord is known to be obstructive or difficult, so as to force the landlord to comply with the statutory requirements.
The tenant will be responsible for their own legal and valuation fees as well as the landlord’s legal valuation fees in the process.
We Can Help
At MW, our mission is "To make quality legal services accessible to everyone" including Landlords and Tenants who wish to negotiate lease extension terms.
Our specialist Leasehold Enfranchisement Solicitors are a team of highly skilled with years of experience in both Voluntary and Statutory Lease Extensions. If you are considering a lease extension or would like to discuss the specifics of your extension call us today on 020 3551 8500 or email us at firstname.lastname@example.org