Lease extensions for flats

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1 Lease extensions for flats Christopher Last Leasehold Advisory Service December 2014 Disclaimer Whilst we make reasonable efforts to ensure our content is accurate and up-to-date, information and guidance in this webinar does not and is not intended to amount to legal advice in any particular case No responsibility for any consequence of relying upon the webinar material or presentations of the webinar is assumed by LEASE or any of our advisers Page 3 Why extend your lease? Wasting asset Short leases are hard to sell Cost increase over time Alternative to enfranchisement

2 Page 4 How can a lease be extended? Voluntary agreement Any term Any price Statutory entitlement Leasehold Reform, Housing and Urban Development Act Page 5 Voluntary lease extension Advantages Agreed, not adversarial Lower costs? Quicker? Disadvantages Neither party can be compelled No recourse to court/tribunal Costs set by the landlord Page 6 The statutory right 90-year extension A peppercorn ground rent To qualify Long lease Registered owner for two years No residence requirement Certain landlords are exempt

3 Page 7 To prepare Obtain a valuation Ensure you can pay the likely price Including costs! Identify the competent landlord Is it necessary to instruct a solicitor? Page 8 The Section 42 notice Notice to landlord stating your intention to extend the lease Not prescribed Can be bought from a legal stationers Contents Name and address of landlord and tenant Particulars of property concerned Plan Additions/other property Page 9 The Section 42 notice Specify a premium Must be realistic Cadogan v Morris (1999) 1EGLR 59 Made in good faith Cornwall Crescent London Ltd v Royal Borough of Kensington & Chelsea (2005) EWCA Civ 324 Allow at least two months for counter-notice

4 Page 10 Serving the s42 notice May be signed by lessee or their representative Notice not invalidated by inaccuracies Schedule 12, Paragraph 9 Consequences of an invalid notice Costs No new notice for 12 months Page 11 The counter-notice No prescribed form, but some s45 requirements Must: Admit Deny Challenge under s47(1) redevelopment Invalid if no mandatory statement given Page 12 The counter-notice State whether the landlord is acting on behalf of any other landlords Give the landlord s address for notices in England and Wales

5 Page 13 Counter-notice denying the claim On grounds that the leaseholder did not qualify Landlord has two months from the date of the counternotice to apply to court for a declaration that the claim notice is of no effect Page 14 Counter-notice admitting the claim Must state: Which proposals are accepted Which proposals are denied Where proposals are denied, counter-proposals must be given Page 15 Counter-notice admitting the claim If the premium is disputed, an alternative premium must be proposed This need not be reasonable

6 Page 16 Failure to serve a counter-notice Leaseholder can apply to the county court for an order granting the new lease on the terms proposed in their claim notice Application must be made within six months of the date the counter-notice was required to be served Page 17 Post counter-notice Any other landlord may serve a notice to act independently of the competent landlord Where terms agreed, forward to completion Where terms are not agreed Two months to negotiate Apply to First-tier Tribunal/Leasehold Valuation Tribunal Must apply within four months of relevant date Page 18 Tribunal Tribunal can decide: Premium Terms of the new lease Costs No prescribed forms, but the tribunal produces their own

7 Page 19 Completion Set-out in Paragraph 7 of Schedule 2 of the 1993 Regulations: Landlord drafts the lease within 14 days of agreement / determination Leaseholder has 14 days to make amendments, or will be deemed to have approved the lease Once approved, the landlord must send engrossments to the leaseholder. Completion takes place the first working day 21 days after notice to complete has been served, unless that date falls after the initial two month period Page 20 Completion Once terms of acquisition are agreed Terms of the new lease Premium to be paid NOT costs Two months from date of agreement/determination to complete Apply to county court after this time Two month time-limit to apply Page 21 Disputing costs Reasonable under Section 60 Leaseholder should ask for a time recording breakdown of landlord s costs Was a senior solicitor unnecessarily doing work?

8 Page 22 Withdrawal Where tenant does not want to proceed Deemed withdrawal where: Leaseholder fails to apply to tribunal within six months of receiving counternotice and no new lease is entered into; Leaseholder fails to apply to county court within six months where no valid counter-notice is served; Where no valid counter-notice is served and the leaseholder applies to the county court, but no new lease is entered into and no further application to court is made within two months; Neither party makes an application to court during the final two month period within four months of the date the terms of acquisition were agreed; Where the flat is sold and the notice is not assigned at the same time; The court orders withdrawal Costs consequences No fresh application for 12 months Page 23 Sale of the flat Leaseholder may serve notice and assign the benefit to a purchaser Assignment must take place at the same time as the sale Agreement should be reached as to costs Safest after counter-notice Page 24 Missing landlord Leaseholder must qualify Application to court to dispense with service of claim notice Reasonable efforts to find the landlord Tribunal determines premium to be paid Paid into court Vesting order granted by court

9 Page 25 LEASE Fleetbank House 2-6 Salisbury Square London EC4Y 8JX Tel:

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