The key steps in the process are set out below:
- Check you qualify
- Obtain a valuation
- Prepare and sign the notice
- Serve the notice
- Receive the counter notice
- Apply to tribunal (if necessary)
- Complete and register the new lease
Check you qualify
The first step is to check that you qualify for the right to extend your lease. If you can answer yes to both of the questions below you will very probably qualify for the right to extend your lease.
- Have you owned your flat for at least 2 years?
To serve a notice of claim you need to have been the registered owner for at least two years when the notice of claim is served. We can check this for you if you want.
Please remember the day on which you completed your purchase is probably not the day on which you became the registered owner at the Land Registry. Registration normally takes 3-4 weeks and sometimes longer.
- Was your lease granted for a term of at least 21 years?
Regardless of the length of the lease now, your lease must have originally been granted for a term of at least 21 years.
Most residential leases are granted for an initial term of 99 years or 125 years. Some are granted for less, but provided the initial term is more than 21 years, you will qualify.
To check the length of your lease you will either need to look at the land registry title documents or to read the lease to check the length of the ‘term’ (e.g. 99 years from 24th June 1984). If you are having difficulty working out the term we can help.
Getting a valuation
Getting a valuation report is essential, as without this you will not know how much to offer the freeholder in the initial notice, nor will you have any idea about the overall capital cost of extending your lease.
A good valuation report will tell you both.
There are different ways in which the valuer can report to you. The simplest (but least accurate) is via a ‘desktop’ report – which is prepared without the valuer actually visiting your flat.
This may be cheaper but can be a false economy as the valuer has a less accurate picture and in negotiation later on there may be elements that have been overlooked as there has been no physical inspection.
A more comprehensive report and valuation involves a site visit. This is has significant advantages as it will be more accurate and will set out the findings in more detail. Either way a valuation report is needed as without this you will not have any real idea of the overall likely cost and will be unable to proceed to serve a notice.
Preparing and signing the notice
The initial notice must be prepared accurately, using all of the relevant information. This is best done by a solicitor as mistakes can make the claim invalid. The notice itself must be signed personally by the flat owner.
Once the notice is served the landlord is entitled to ask for a deposit of 10% of the figure included in the notice.
If the notice is invalid you will have to pay the landlord’s costs of investigating your claim and this will be taken from the 10% deposit mentioned above.
Serving the notice
The notice needs to be served on your landlord and anyone else (e.g. another landlord) that the law requires to be served with a copy. The landlord must be given at least two months to respond.
Once the notice is served the landlord has certain rights. He can inspect the flat (at your cost) and also ask for a deposit of 10% of the proposed offer figure to be held by his solicitors pending the outcome of the claim.
There are also technical requirements relating to the ‘deduction of title’ (essentially proving that you qualify) that need to be dealt with.
Receive the counter notice
Once the counter notice is received, your valuer and the landlord’s valuer will need to negotiate the premium to be paid for the new lease.
Your solicitors will then also need to agree the format of the new lease.
If terms can be agreed you can proceed towards completing the new lease – by paying the agreed premium and signing the relevant legal documents.
Apply to the tribunal
If terms cannot be agreed then it may be necessary to make an application to the First Tier Tribunal (Property Chamber)*.
If this happens, the tribunal will ‘take control’ of the process and direct what steps the parties should take to get the matter ready for a final hearing. If a hearing takes place, the tribunal will hear expert evidence from both sides and make a decision on the premium and if need be the lease terms.
If your case does go to the tribunal then neither side can recover their costs from the other. You will be liable for some of the landlord’s costs under section 60 of the 1993 Act (explained in more detail below). However, any tribunal costs do not form part of the recoverable costs.
Once the counter notice is served your representatives have a period of 6 months to agree the terms of the new lease (the terms of the lease itself and the premium that you will pay). If this cannot be done within this time then an application has to be made to the tribunal. If this is not done before the 6 month deadline, the claim will be deemed to be withdrawn, you will need to pay the landlord’s costs (legal and valuation) and you will not be able to bring a new claim for a period of 12 months.
* formerly the Leasehold Valuation Tribunal (LVT).
Complete and register the new lease
Once the terms are agreed, the solicitors for the landlord will provide a signature copy of the new lease and a statement showing how much money is required to complete the new lease.
The statement will include details of the landlord’s recoverable costs – which cover the cost of the following items:
- Checking your notice
- Having a valuation prepared to respond to the notice
- Serving counter notice
- Dealing with the conveyancing on the grant of the new lease
The landlord cannot recover the cost of time spent in the tribunal or preparing for tribunal, nor time spent in negotiations.
Your own advisors will account to you at the same time and send you the document to sign and a request for funds. If necessary, the landlord’s costs can be challenged – in the Property Chamber if need be – although the costs of doing so are not recoverable.
Once the new lease is signed and funds are received the new lease can be completed. It must then be registered at the land registry by your advisor.