Lease Extensions

Statutory right to extend long residential lease

The good news is that long leaseholders have a statutory right to extend their leases by 90 years and the premium to extend the lease,  is protected  by the statutory formula for how the premium should be valued, which if necessary, can be enforced in the Leasehold Valuation tribunal.

One important requirement under the legislation is that the right to extend a residential long lease only applies if the owner has been the registered owner at the Land Registry for at least 2 years.

If the lease is  less than 85-90 years, the solution is typically for the seller, who should have the 2 year required ownership, to serve the statutory notice to claim the lease extension and then to assign (transfer) the legal benefit of that notice to the buyer.

Non-statutory or informal lease extension

In reality, most leases are extended by consent because in most cases the freeholder cannot simply “name its price”  for the  premium to be paid  to extend. A typical approach is to serve the statutory notice to start the statutory process whilst at the same time negotiating with the freeholder.

Thinking that you can do a quick deal with the freeholder without serving the preliminary notice or where surveyors negotiate over applying the parameters in the statutory premium formula can result in problems for you, especially where you need to proceed quickly if you are looking to sell the flat.