PCL Renewal Service

Procedure

Pursuant to the Leasehold Reform, Housing and Urban Development Act 1993 owners of a long lease (more than 21 years) who have been registered proprietors of their flat for more than 2 years and pay a nominal ground rent (for example £100 p.a) are entitled to extend their leases by 90 years on top of their existing term and reduce ground rent to nil (or one peppercorn as we say in the law).

In order to start the process we need to know the amount you wish to offer by way of a premium. We would advise that you instruct a surveyor to value the premium that you have to pay. This is because if the premium that you offer is unreasonable this will invalidate your notice. We can recommend an expert surveyor to you. All the surveyors that we recommend have been vetted by us to ensure that not only do they have the requisite expertise but also provide you with value for money.

Once your surveyor has advised you and we have see the valuation report we can draft the Initial Notice which is the formal notice that commences your claim (known as a Section 42 Notice). The lowest possible premium is inserted into the Section 42 Notice. The Section 42 Notice is then served on your landlord and, if applicable, any third party to your lease such as a head leaseholder or management company. The Section 42 Notice must state a date which your landlord must respond by which must be at least 2 months from when the notice is given to your landlord.

Your landlord therefore has roughly two months in which to respond to your Section 42 Notice with their Counter Notice (known as a Section 45 Notice). The Section 45 notice will include the price they want for the new lease and any variations that they wish to make to your existing lease. Your landlord is also entitled to request a deposit of 10% of the premium you have stated in your Section 42 Notice (subject to a minimum deposit of £250) which is payable within 14 days from the demand.

If the landlord does not serve a Section 45 Notice within two months from the date you serve the Section 42 Notice (which is unlikely) you can apply to the Court for an order that the new lease be granted on the terms of your Section 42 Notice (and importantly the new lease to be for the price you have stated in your Initial Notice which will be the lowest justifiable premium).

If any of the above cannot be agreed after two months from service of the Section 45 Notice then you have a window from this date until 6 months from the date of service to ask the First Tier Property Tribunal to determine the price. If this application is not made within 6 months from the Section 45 Notice you will have deemed to have withdrawn your claim. You will then be liable for the landlord’s costs, your own costs and you will not be allowed to make a further claim for 12 months. To ensure you do not miss this deadline our fixed price includes this protective application. We also encourage you to make this application as soon as possible (the earliest date is 2 months from service of the section 45 notice). This ensures that the matter avoids becoming protracted.

Once all terms have been agreed you have a further 4 months to complete the Lease Extension (i.e pay the premium and the landlord’s legal and surveying costs). If you do not complete within 4 months you will have to make a further application to the Court failing which your claim is deemed withdrawn. The price of this application is not included in our fixed price since it will be up to you to organise the finance to complete the lease extension within this time scale.

Why Undertake the Statuory Procedure At All?

In our experience whilst you can attempt to agree terms with your landlord without following the statutory procedure, the landlord will usually use this to his advantage by (a) getting you to pay a premium at the top end of the scale remembering that valuing a premium is not an exact science (b) getting you to pay a higher ground rent (under the statutory procedure no ground rent is paid - this is part of the premium you pay) and (c) varying the terms of the existing lease to their advantage (under the statutory procedure the amendments permitted are restricted). This is unfair so our PCL Lease Renewal Service uses the statutory procedure to its full extent to ensure you obtain a new lease for the best price and for the best terms.

Recommended by

"Through their Lease Clinic, Comptons have simplified the lease renewal process. Their expertise in this field is reassuring to all those involved and most definitely minimises the anxiety and delays caused by having to extend these shortening leases"
KFH