The individual right to extend
Leasehold Reform, Housing and Urban Development Act 1993.
What is it?
The individual right to a statutory lease extension applies to all qualifying tenants of flats.
The qualifying condition is that you must be the tenant of a flat which you hold on a long lease (i.e. a lease for an original term in excess of 21 years). Furthermore, you must have owned the lease for at least two years before the date of the claim.
For the purpose of the lease extension, there is no limit to the number of flats you may own in the building, and you may extend any or all of them provided that the conditions are met. However, you cannot be a qualifying tenant if you hold a business lease.
The personal representatives of a deceased qualifying tenant can make a claim provided that the right is exercised within a period of two years from the date of the grant of probate.
What do I get?
If you qualify, then you will be entitled to acquire a new extended lease in substitution for your existing lease.
This extended lease will be for a term expiring 90 years after the end of the current lease and will reserve a peppercorn rent throughout the term.
Broadly, the lease will otherwise be on the same terms as the existing lease but the landlord will have certain additional redevelopment rights, exercisable within 12 months before the expiration of the current lease term and within 5 years before the expiration of the extended lease.
The price
The price to be paid for the new lease will be the aggregate of separate elements.
In addition to the price and the tenant’s own legal costs and valuation fees, the tenant will also be required to reimburse the freeholder his legal costs and valuation fees.
How do I claim?
The procedure to be followed is very similar to that for collective enfranchisement. It is therefore important to be aware that most of the time limits imposed on the procedural stages of the claim are strict and a failure to do something within the required time frame can have dire consequences for the defaulter.
Disputes
If either the terms of the lease or the premium remain in dispute after two months following the date of the counter-notice, then either party can apply to the First-tier Tribunal (Property Chamber) (or, if the property is in Wales, to the leasehold valuation tribunal) for the matter in dispute to be determined.
This application must be made within six months following the date of the counter-notice or the claim is lost.
Most claims are settled by negotiation. If a First-tier Tribunal is required to make a determination, then there is a right to appeal that decision to the Upper Tribunal (Lands Chamber) if permission is given to do so.
Completion
Once the terms of the lease and the premium have been agreed or determined by the First-tier Tribunal, then the matter reverts to a conveyancing transaction with the parties proceeding to completion of the new lease.
The tenant can withdraw at any time and there are provisions for the tenant’s notice to be considered withdrawn if certain strict time limits are not met by the tenant. As in collective enfranchisement, the tenant is on risk as to costs as from the date of his tenant’s notice so it is essential to be prepared and to be properly advised before starting down the road to an extension.
A tenant’s notice is capable of being assigned but only in conjunction with a contemporaneous assignment of the lease. It is common for a seller to serve a notice and then assign that notice with the lease to a purchaser, who will take over the claim.
There is no limit to the number of times that a tenant can exercise this right – so long as he is prepared to pay the costs for doing so.
"For the purpose of the lease extension, there is no limit to the number of flats you may own in the building. You may extend any or all of them provided that the conditions are met."
Anna Favre
Partner, Residential estates
Snapshot
50% of the marriage value is to be paid for the new lease.
You will need to have been the owner of the lease for 2 years before the date of the claim.
months
You will have 6 months to submit the application following the counter-notice claim.