LRHUDA 1993 provides qualifying leaseholders the ability to extend their lease on the following terms:
- An additional 90-year term to the unexpired term. For example, if you have 50 years left to run on your lease, after the lease extension you will end up with a lease with an unexpired term of 140 years
- A lease on exactly the same terms as that which you have at the moment (subject to minor up-dating) and
- All for a “peppercorn rent” (i.e. nil rent for the remainder of the term).
Section 42 Notice of Claim:
The notice triggers the statutory process to acquire a new lease. The notice must contain information specified by statute, including, the full name of the tenant(s), the address of the flat, the details of the lease, the terms for the proposed lease and the premium the tenant proposes to pay and any other amounts proposed to be paid to other landlords. If the amounts payable to the different landlords are not separately stated, the initial notice will be invalid. The notice can be signed by the tenants or on their behalf.
Service of Notice:
The Notice of claim must be served on the competent landlord, intermediate landlords and any third party to the lease, such as a management company or guarantor. A tenant can apply to the court for an order to dispense with the service of the initial notice on any other landlord so long as the identity and whereabouts of the competent landlord is known. The initial notice must specify that the court has made such an order.
Effect of Serving the Notice:
The statutory procedure is started, the Tenant is liable to pay the competent/intermediate landlords costs and the valuation date for the premium payable is set.
The Process After Service (in brief):
- The Notice of Claim is registered at Land Registry as a notice or Land Charge
- The landlord may require payment of a deposit of either £250 or 10% of the proposed premium (whichever is the greater).
- The landlord may require payment or an undertaking for its costs, valuation fees, solicitor’s fees and the cost of a lease plan.
- The tenant must allow the landlord to inspect the flat to carry out a valuation .
- Within 2 months of the Notice of Claim, the landlord must serve a counter notice either admitting or denying the claim or make an application to the court for an order that a new lease is not granted on the grounds of redevelopment.
- If the claim is not admitted then the tenant has 6 months to dispute the rejection through the courts to make an order for the grant of a new lease.
- Parties negotiate the terms of acquisition, i.e. lease terms (but not the form of lease, lease plan, the premium) or if terms cannot be agreed, either party may make a Tribunal application for determination within the set time frame of 2-6 months following the service of the counter notice.
- Once the terms of acquisition have been agreed or determined, the parties have 2 months to complete the lease.
- If the lease is not completed within this time, there is a 2 month period in which either party must make an application to the court for an order for performance/discharge, otherwise the tenants notice of claim is deemed withdrawn.