In most circumstances having a Lease means you own a leasehold flat and owning a house means you have a freehold but this is not always the case. In some rare cases you can find leasehold houses and so you may want to extend the Lease like you would a leasehold flat.
With a leasehold flat you have a statutory right to extend under the Leasehold Reform, Housing and Urban Development Act 1993 as long as you meet the qualifying criteria. However, with a leasehold house the statutory right can be found under the Leasehold Reform Act 1967.
The rights under the 67 Act are not the same as those under the 93 Act. Under the 67 Act you can extend the Lease by an additional 50 years from the expiry of the original Lease.
Under Section 14 of the 67 Act will only apply if certain qualifying conditions are met:
• The property must be a house;
• The property must be on a long lease;
• The tenant must have held the lease for at least 2 years
There are two questions to be answered:
1. Is the building one “designed or adapted for living in?” and
2. Is it a “house reasonably so called”?
The Court of Appeal confirmed that the correct approach is whether it is reasonable to call the property a house not whether it is possible to call it a house.
The tenant must have held a lease of the house under a long tenancy for the last 2 years. It is not necessary to live in the house to have 67 Act rights.
Under section 1 of the 1967 Act there is a maximum rateable value for extensions. For tenancies entered into before 1 April 1990 the test depends on the rateable value of the premises on the “appropriate days” which are 23 March 1965 and 1 April 1973.
LRA 1967 rights are not available in respect of certain leases, including:
• Business leases
• Agricultural holdings
• Charitable housing trusts.
The terms of the new Lease will be the same as those of the existing lease, save that any provision for renewal or purchase of the reversion and any break clause are to be excluded (as per section 15).
The new rent under the extended lease is to be a ground rent representing the letting value of the site only. After the new rent has been paid for 25 years, the landlord may require a revised rent to be paid representing the letting value of the site at that time.
The tenant is required to pay the landlord’s costs in respect of:
• Investigating the tenant’s right to an extended lease;
• Drawing up the new lease; and
• Valuation leading to assessment of a new rent, provided that it is obtained before the new lease is granted.