Have you owned and been registered as the owner of your flat for at least two years? If so, you are a potential qualifying leaseholder under the Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”). The 1993 Act enables a qualifying leaseholder to serve a notice, known as a section 42 notice, on their landlord to acquire a lease extension. In return for a premium, the leaseholder will obtain a 90-year lease extension in addition to the unexpired term of the lease, and the ground rent will become a peppercorn (i.e. nil).
- In order to draft the section 42 notice, a solicitor will be required to work alongside a qualified and experienced surveyor who will carry out a specialist valuation for lease extension purposes, produce a comprehensive valuation report and advise on the premium to be inserted into the section 42 notice.
- Once a leaseholder has served the section 42 notice, the landlord has at least 2 months to serve a counter-notice that will most likely specify a higher premium than the leaseholder will end up paying for the lease extension.
- Negotiations between the landlord’s appointed surveyor and the leaseholder’s appointed surveyor commence and in most cases a mutually acceptable premium is reached.
- It is sometimes necessary to make a protective application to the tribunal to protect the section 42 notice. In most cases, a full hearing to determine the premium payable for the lease extension can be avoided.
- Once the premium is agreed, the form of lease, drafted by the landlord’s solicitor, is agreed and a completion date is set.
- The lease extension is completed and the new lease is registered.