Having practised property law for decades, Meaby&Co is expertly placed to help guide you through the process of statutory lease extensions, whether you are a tenant or a landlord.
Our expertise in dealing with lease extensions on flats and houses means that we are able to simplify an often complex and confusing area of law.
We understand the concerns and uncertainty that exist for tenants who feel they lack security as their lease term falls.
Our team is here to help you claim your statutory rights and, by working with specialist valuers, negotiate the best possible deal on your behalf.
Whether you are interested in extending the lease on flats or a house we are here to secure the best possible outcome.
Lease Extensions for Flats
There are two ways in which tenants can extend their lease. The first is for the landlord and tenant to negotiate a lease extension by agreement (please see Informal Agreement) and the second is for the tenant to claim the statutory right to a lease extension under the Leasehold Reform, Housing and Urban Development Act 1993 (‘the 1993 Act’).
The legislation is complex, but broadly speaking tenants qualify for the right if:
- they hold a residential lease of a flat which was originally granted for a term of over 21 years. This means commercial and short-term tenants will not be considered qualifying tenants; and
- they have been registered as proprietor of the flat for a minimum of two years.
If the tenant qualifies for the right, they are entitled to claim a 90 year lease extension, at a peppercorn (nil) rent, in return for paying a premium to the landlord.
The parties are advised to obtain a professional valuation from a surveyor. This valuation is specific to lease extensions and is not the same as a normal valuation of a property. We can assist you in recommending a surveyor to calculate the likely cost should you require such a recommendation.
Lease Extensions for Houses
As with flats, the tenant may negotiate a lease extension by agreement or alternatively claim a statutory right to extend the lease of their house and premises under the Leasehold Reform Act 1967 (‘the 1967 Act’).
If the tenant and the building qualifies, the tenant is entitled to claim a 50 year lease extension at a ‘modern ground rent’ (which includes establishing site value). Whilst no premium is payable to the landlord, the qualification criteria are tighter than acquiring the freehold and the interest less valuable. Therefore, in practice this right is not commonly exercised.
Fundamental to the right to extend a lease is the definition of ‘house’. In basic terms, the building should qualify if it:
- is designed or adapted for living in; and
- can reasonably be called a house; and
- maybe divided horizontally into flats or maisonettes and is not divided vertically.
The building does not have to be detached.
However, please note that the definition is far wider than one might imagine and there is ongoing case law on the subject.
As regards the tenant, the legislation is complex and exceptions apply, but broadly speaking tenants qualify for the right if:
- they are the tenant of the whole of the house (unless they are already the freeholder of those parts of the house of which they are not a tenant) but the tenant need not be the tenant of the premises; and
- they hold a lease which was originally granted for a term of over 21 years. Unlike flats, certain commercial tenants will be considered qualifying tenants; and
- the lease has been granted at a low rent and the property falls within certain rateable value limits; and
- they have been registered as proprietor of the house and premises for a minimum of two years (trustees, trust beneficiaries and personal representatives or family members succeeding to a tenancy on death might also qualify).
It is strongly advised to obtain a professional valuation of the rent payable from a surveyor with specific experience of the 1967 Act. We can assist you in recommending a surveyor to calculate the likely cost should you require such a recommendation.