Lease Extension Negligence

Shilpa Mathuradas
kensington apartments

Table of Contents

What is Lease Extension Negligence?

Solicitors Negligence when a Tenant claims a new lease of a flat under the Leasehold Reform, Housing and Urban Development Act 1993

From failing to advise a client when they purchase a leasehold property about the issues they will experience with a short lease to serving a defective notice, this area has particular pitfalls which may result in a claim for professional negligence against solicitors and surveyors dabbling in this area!

Whether you are a tenant or landlord, it is important to instruct a law firm and surveyor who are familiar with and specialises in the area of lease extensions. There are far too many solicitors and surveyors who hold themselves out as a specialist in this practice area but are not.

Deciding to purchase a leasehold property

However, the negligence may not start with your lease extension solicitor but with your conveyancer who fails to advise you on the purchase that your lease is below 80 years and therefore this will leave you with a larger premium to pay for a lease extension and further that you will have difficulty selling the property as it is unlikely to be mortgageable leaving cash purchasers only who will be in a position to buy. If you had been advised of these issues, you may have at that stage decided not to proceed. However, it is likely a conveyancer will already be alert to this due to the issues raised by a lender.

Secondly in order to initiate the process and to be in a position to serve a notice, the tenant must have owned the lease for at least two years. Where leases are in danger of going below 80 years, it is common to find a tenant to serve the notice and then assign the benefit of it simultaneously with the lease on sale. This allows a buyer of the flat to take advantage of the right to a new lease under the Leasehold Reform Housing and Urban Development Act 1993. The assignment needs to be correct failing which it will not be effective and could leave a new buyer having to wait two years before they acquire the right to extend their lease. This could be devastating especially if at that time the lease falls below 80 years and marriage value is payable making a lease extension more expensive.

Section 42 Notice

The Section 42 notice must be correctly prepared and served on the competent landlord. Further, a copy of the notice must also be given to the intermediate landlord. Failure to serve a valid notice could be an expensive mistake as the initial notice will be deemed withdrawn and the leaseholder has to pay the landlord’s reasonable legal and valuation costs up to the date of withdrawal. Further, the tenant cannot re-serve another notice for 12 months.,  In some circumstances, the leaseholder may simply serve another notice without withdrawing the first. This is because their first, invalid, notice would be treated as a nullity and would not, therefore, need to be withdrawn before another notice was served. The 12 months would not apply in that case and the new notice could be served straight away. However, the tenant cannot escape paying the liability for the landlord’s reasonable costs for having to deal with the notice though.

Registration of notice

It is also important once a notice has been served that it is registered as once it is served it is registrable against the title to the freehold and any other intermediate interests as a land charge or notice. The initial notice will not be binding on future owners if it has not been registered. This could have consequences on a tenant if the freehold property is sold before a tenant’s claim is concluded. Ultimately, the tenant would have to start again and if the lease has been assigned in the intervening period the new tenant will have to wait two years to enable it to serve a notice of its own right  There is of course, also the damage that the lease falls below 80 years so the lease extension becomes much more expensive.

Counter-notice

Once the notice is served the landlord will have to serve a counter notice by the date stated in the notice. Here solicitors acting for the landlord will need to be careful as failure to serve a valid counter notice by the date specified in the initial notice allows the tenant to apply to the court for an order granting it the new lease on the terms the tenant proposed in the initial notice.  Once the counter notice is served the parties have between two and six months to come to an agreement. After the first two months of negotiation either party may apply to the tribunal for a decision on the disputed issue which is usually the premium.

Application to the Tribunal

If the tenant fails to apply to the tribunal within 6 months of the date of the counter-notice, the tenant’s claim for a new lease will be deemed withdrawn and it will have to wait to serve a further notice.

Completion of the New Lease

Thereafter once the terms of the acquisition have been agreed between the parties or where such terms have not been agreed between the parties but have been determined by the Tribunal, the lease must be completed within two months of that date known as “ the appropriate period”. If the lease has not been entered into by the end of this period either party can make an application to the county court for an order either to:

  • Perform the obligations arising from the initial notice ;
  • Be discharged from the obligations arising from the initial notice,

The application to the court must be made in the period starting with the end of the appropriate period and ending two months thereafter. If no court application is made within this time frame and the lease has not been completed, the tenant’s notice of claim will be deemed withdrawn and the tenant cannot make another application for a new lease during a period of 12 months from the date of withdrawal

Beware of the pitfalls when applying or opposing the grant of an extended lease as it could have disastrous consequences for a tenant or landlord if it is not done properly or if any of the time limits are not met.

Share this article

Contact

Contact us today

For a free initial conversation call 020 7485 8811

Email us Send us an email and we’ll get back to you






    Related InsightsVIEW ALL

    1. House-Finsbury-Park
      19.5.2023

      Declaration of Trust for Property

      If you are buying a property jointly, you may want to consider making a declaration of trust to record your...

      Read more
    2. tate modern london
      11.5.2023

      Overlooking Nuisance Claims

      Overlooking Nuisance Claims – net curtains not necessarily! I refer to the article https://law.wpstaging.uk/blog/overlooking-nuisance-claims-buy-some-net-curtains/ which concerned...

      Read more
    3. cars on portobello road
      11.5.2023

      Rent Repayment Order: Rakusen v Jepsen

      Rakusen v Jepsen & Others 2023 Judgement was given in this case on the 1st March 2023 and when it was settled...

      Read more
    4. 10.5.2023

      Leasehold Reform expected by end of 2023

      The government announced in 2021 the introduction of various leasehold reforms which will affect the leasehold system for properties in England...

      Read more
    5. kyance mews london
      13.2.2023

      Transfer of Equity Stamp Duty

      Do I Pay Stamp Duty Land Tax When Transferring Property into My Partner’s Name? When it comes to property...

      Read more
    6. apartments in london
      13.2.2023

      Shared Ownership Stamp Duty

      Do you pay stamp duty on shared ownership? When you buy a new shared ownership property, you are given two...

      Read more
    7. little venice in London
      8.2.2023

      Severance of a Joint Tenancy

      Severing a Joint Tenancy Normally, when couples buy a property together they do so as joint tenants. This means they...

      Read more
    8. camden lock
      8.2.2023

      Tenants in Common vs Joint Tenants

      Tenants in Common vs Joint Tenants: Which is best for buying a property together? When it comes to buying a...

      Read more
    9. Japanese Knotweed
      5.2.2023

      Japanese Knotweed: Knot in my backyard again!

      Many will have read the recent case in which a furniture designer pursued his seller successfully after he moved into...

      Read more
    10. door handle with a key
      20.1.2023

      Stamp duty tax to remain the same until 2025

      Good news for buyers as the current SDLT rates will remain until 2025 Buyers looking to purchase this year will be...

      Read more
    11. Concerned upset millennial couple
      19.1.2023

      Half of UK renters worried they will not...

      As rent rises for the majority of UK renters, half are worried they will not be able to afford it...

      Read more
    12. grand union walk camden
      23.9.2022

      First-time buyer stamp duty exemption – don’t get...

      Stamp duty is the bane of every home buyer, with only first-time buyers being exempt from paying the tax if...

      Read more
    13. london property
      9.6.2022

      TOLATA Claims

      What are trusts of land? Property ownership is not always a straightforward legal issue, particularly where the parties are cohabitees...

      Read more
    14. right to light
      8.6.2022

      Right to Light Law

      Right to Light Law in the UK Property owners have a legal right to light as set out in the...

      Read more
    15. flats in a london street
      8.6.2022

      Landlords and the Dangers of Rent-to-Rent

      Rent-to-Rent refers to the practice of landlords letting a whole property to a tenant (usually a limited company), which is...

      Read more
    16. accidente de construccion
      30.5.2022

      The uncertainties of beginning a building project now

      The construction industry is seeing a perfect storm at the moment with labour shortages following Brexit and material costs which...

      Read more
    17. A hand is holding a model house
      6.4.2022

      The End of Ground Rents

      The Leasehold Reform (Ground Rent) Act 2022 It has been confirmed that The Leasehold Reform (Ground Rent) Act 2022 will come into...

      Read more
    18. Low rise office building
      26.11.2021

      The new Commercial Rent (Coronavirus) Bill

      On the 9th November 2021 the Government announced the new draft Commercial Rent (Coronavirus) Bill. It is proposed that a new...

      Read more
    19. Green ecological house in empty field
      9.11.2021

      Can I still claim adverse possession?

      The principle of “adverse possession” commonly known as “squatters rights” is a principle which allows a person who does not...

      Read more
    20. party wall disputes
      5.10.2021

      Buying a property where a Party Wall Award...

      Buying a house with a party wall agreement Buying a property can already be a stressful process but finding out...

      Read more
    21. carnaby street london
      1.10.2021

      Commercial rent arrears options post-Covid

      Whilst we are reminded every day that Covid is very much still with us and that the public should still...

      Read more
    22. giving keys to couple
      24.9.2021

      First Time Buyers Tax Relief Reminder

      First-time buyers have been urged to make the most of a ‘forgotten tax relief’ that could save them thousands of...

      Read more
    23. 26.6.2021

      The Risks Of Buying Properties Off Plan!

      The Daily Mail reported recently that 300 families a week are having to move into shoddy newly built homes. Not all...

      Read more
    24. 7.5.2021

      Costly clauses missed by lawyers in leasehold contracts

      A mum has been left facing a bill of millions of pounds a year for the ground rent of her...

      Read more

    VIEW ALL