If you wish to sell a leasehold property, you may be considering whether or not to extend your lease in order to maintain the property’s value, and make it a more attractive purchase for a potential buyer.
The first step of the lease extension process would be to make contact with your Landlord informally, to ascertain whether they will grant you an extension on a voluntary basis. This procedure would avoid the costs of complying with the formal procedure. If your Landlord does agree to progress with an informal lease extension, they would take the step of obtaining their own valuation; for which you will be required to reimburse them.
If you are not in a position to seek an informal lease extension from your Landlord, you could obtain a formal lease extension under the Leasehold Reform, Housing and Urban Development Act 1993 for this process to be utilised, namely that you have held the property for at least 2 years.
If you do not know who the Competent Landlord of the property is, section 41 of the 1993 Act gives the Leaseholder the right to serve information notices requesting this information from your immediate Landlord, the freeholder, or anyone else with an interest in the property. Usually, the Competent Landlord is the Freeholder. However, we would recommend that you obtain independent legal advice as your representative would be able to undertake these investigations on your behalf to confirm this, saving you valuable time.
Under section 42(3) of the 1993 Act, there are specific procedural requirements for the Notice. We would recommend that you instruct a Solicitor to draft the Tenant’s notices, as it is very important that they are drafted correctly and in a legally compliant manner. If the Tenant’s notice is incorrect, the Landlord can reject it, and this could have the effect of preventing you from serving another notice for 12 months. Furthermore, the Leaseholder is liable for the Landlord’s reasonable costs from the date they receive the notice, so rejection of the notice due to invalidity could be quite an expensive mistake for a Leaseholder to make.
The process may include several negotiations with the landlord and even referred to tribunal if terms are not agreed on. The matter can be complicated and lengthy without seeking professional legal advice from the outset. We can assist you all the way through these procedures and register the lease extension at HM Land Registry once it has completed.
If you have any further queries in relation to the lease extension process, then please contact either Lorraine Lancaster or Lucy Grunwell on 01702 338338.