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Lease Extension

This publication guides practitioners through negotiating and drafting lease extension agreements.

1 Matter Plan

Overview

The commentary covers issues like qualifying criteria, valuations, costs, timetables, assignment, conveyancing processes, withdrawal, and termination.

The Reference materials folder includes guidance on electronic signing and witnessing, and the comprehensive Getting the matter underway folder includes compliance and client care documents. Using the extensive Retainer Instructions when gathering information ensures nothing is missed.

Precedents in this publication include:

  • to do lists with timetables;
  • enclosures for clients explaining the process;
  • all required statutory forms and notices;
  • a Deed of Assignment of s 42 Notice;
  • a Deed of Surrender and Regrant of Lease.
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1 Matter Plan Included

  • Item icon ALERT - 1. Lessees no longer need to have owned properties for 2 years before starting enfranchisement processes. 2. From 3 March 2025, the non-residential limit on right to manage claims rises to 50%: Leasehold and Freehold Reform Act 2024.
    1. Lessees no longer need to have owned properties for 2 years before starting enfranchisement processes. 2. From 3 March 2025, the non-residential limit on right to manage claims rises to 50%: Leasehold and Freehold Reform Act 2024.

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  • Item icon Full Commentary - Lease Extension - Acting for the Landlord
  • Folder icon Reference materials
    • Item icon Electronic Signing and Witnessing
    • Item icon Looking to the Future
      Pending legislative and regulatory changes with significant implications.

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    • Item icon Further information
    • Item icon Article: The Leasehold and Freehold Reform Act 2024
    • Item icon Article: All aboard the leasehold express to commonhold
    • Item icon Article: Are we really ready to be possessed?
    • Item icon Article: Temporary rent concessions for commercial leases - Side letter or deed of variation
  • Item icon Overview
    A lease is granted for a fixed number of years, and once those years have expired the property reverts to the landlord. Therefore, by the nature of the beast, a lease is a depreciating asset as it starts to lose value as the lease term diminishes. The statutory rights discussed in this ...

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  • Item icon Summary of the process
    The usual steps in acting for the tenant on a lease extension are:

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  • Folder icon A. Getting the matter underway
    • Item icon File cover sheet - Lease extension
    • Item icon To do list - Lease extension
    • Item icon First steps
    • Item icon Retainer instructions - Lease extension
    • Folder icon Compliance documents
      • Item icon Client Due Diligence and Anti-money Laundering Guidance
      • Item icon Client Details, Identity Verification and Source of Funds
      • Item icon Conflict of interest check
      • Item icon Client and matter risk assessment
      • Folder icon If required - Reporting an issue
        • Item icon Anti-money laundering internal disclosure
    • Item icon Initial letter to client enclosing Client Care and Terms of Business
    • Folder icon Enclosures for initial letter to client
      • Item icon Client care information
      • Item icon Terms of business
      • Item icon Scope of work - Lease extension - Acting for the landlord
      • Item icon A summary of the statutory lease extension process under the Leasehold Reform, Housing and Urban Development Act 1993
      • Item icon Enclosure - Calculating the marriage value for lease extension of a flat
      • Item icon Enclosure - Procedural timetable for a lease extension claim
    • Item icon Time and costs estimates
    • Folder icon If required - Letter to client varying the Client Care and Terms of Business
      • Item icon Letter to client varying the Client Care and Terms of Business
    • Item icon Individual rights – Lease extension for a house
      The right to extend the lease term of a house is rarely used due to its limitations. Therefore, this commentary briefly touches on the topic. For more detail, see the Enfranchisement guide. The current lease term to a house can be extended by 50 years, at no premium, but with a modern ground ...

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    • Folder icon General deeds, agreements, statements, declarations, consents, and execution clauses
      • Item icon Deeds and agreements
      • Folder icon Deeds
        • Item icon Deed for general use
        • Item icon Deed of assignment of agreement
        • Item icon Deed of assignment of agreement with consent
        • Item icon Deed of assignment of an insurance policy
        • Item icon Deed of assignment of equitable interest in residential land
        • Item icon Deed of gift
        • Item icon Deed of guarantee
        • Item icon Deed of release
        • Item icon Deed of release and grant
        • Item icon General deed of indemnity
        • Folder icon Library of standard clauses for deeds
          • Item icon Amendment
          • Item icon Confidentiality
          • Item icon Confidentiality - Extensive
          • Item icon Costs
          • Item icon Counterparts
          • Item icon Dispute resolution
          • Item icon Events beyond control
          • Item icon Governing law and jurisdiction
          • Item icon Interpretation
          • Item icon No assignment
          • Item icon Notices
          • Item icon Severance
          • Item icon Third parties
          • Item icon Waiver
          • Item icon Whole agreement
      • Folder icon Agreements
        • Item icon Agreement for general use
        • Item icon Boundary agreement
        • Item icon Confidentiality agreement
        • Item icon Construction agreement
        • Item icon Heads of agreement
        • Folder icon Library of standard clauses for agreements
          • Item icon Amendment
          • Item icon Confidentiality
          • Item icon Confidentiality - Extensive
          • Item icon Costs
          • Item icon Counterparts
          • Item icon Dispute resolution
          • Item icon Events beyond control
          • Item icon Governing law and jurisdiction
          • Item icon Interpretation
          • Item icon No assignment
          • Item icon Notices
          • Item icon Severance
          • Item icon Third parties
          • Item icon Waiver
          • Item icon Whole agreement
      • Folder icon Statements and declarations
        • Item icon Statement of truth
        • Item icon Statement of truth - High Court
        • Item icon Statutory declaration
        • Item icon Statutory declaration of solvency
        • Item icon Affidavit - General
        • Item icon Exhibit sheet for affidavits - General
        • Item icon Witness statement - Family matters
        • Item icon Exhibit sheet to witness statement - Family matters
        • Item icon Witness statement - Civil matters
        • Item icon Exhibit sheet to witness statement - Civil matters
      • Folder icon Execution clauses
        • Item icon Execution clauses - Agreements and contracts
        • Item icon Execution clauses - Deeds
        • Item icon Execution clauses - Overseas companies
      • Folder icon Consents
        • Folder icon If required - Personal data consent - General
          • Item icon Letter to client enclosing consent - General
          • Item icon Letter to third party enclosing consent - General
          • Item icon General letter enclosing client consent
          • Item icon General letter enclosing third party consent
          • Item icon Consent to provide information - General
          • Item icon Consent to provide information - General - Third party
        • Folder icon If required - Personal data consent - Health professional
          • Item icon Letter to client enclosing consent - Health professional
          • Item icon Letter to third party enclosing consent - Health professional
          • Item icon Letter to doctor enclosing client consent
          • Item icon Letter to doctor enclosing third party consent
          • Item icon Consent to provide information - Health professional
          • Item icon Consent to provide information - Health professional - Third party
        • Folder icon Change of name
          • Item icon Change of name deed for an adult - Concise
          • Item icon Change of name deed for a minor - Concise
          • Folder icon If required - Enrolment by an adult
            • Item icon Change of name deed for an adult - For enrolment
            • Item icon Statutory declaration - Enrolment of adult change of name deed
            • Item icon Notice for the London Gazette on the change of name of an adult
            • Item icon Consent to enrolment of change of name of an adult
          • Folder icon If required - Enrolment by a minor
            • Item icon Change of name deed for a minor - For enrolment
            • Item icon Statutory declaration - Enrolment of minor change of name deed
            • Item icon Affidavit of best interest for the change of name of a minor
            • Item icon Consent to enrolment of change of name of a minor
  • Folder icon B. Lease extension for a flat
    • Item icon Individual rights – Lease extension for a flat
      This section explains the statutory right of a tenant who already owns a flat to purchase a new lease at a premium payable to the landlord. This right is commonly called a lease extension claim. However, the existing lease is not actually extended, instead, a new lease is granted for 90 years ...

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    • Item icon Qualifying criteria
      The qualifying criteria include:

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    • Item icon Parties
      The landlord The landlord will usually be the freehold reversioner. However, if there is an intermediate landlord, the competent landlord is the first landlord above the tenant’s leasehold title to grant the statutory 90-year extended lease term: s 40 of the Leasehold Reform, Housing and Urban ...

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    • Item icon Costs
      Apart from the payment of the premium, the tenant is responsible for:

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    • Item icon Valuation
      This exercise is carried out by each party’s appointed specialist valuer, who deals with these technical aspects and, with the ensuing negotiations, arrives at an agreed premium for the lease extension. The price is calculated according to the statutory formula set out in Schedule 13 of the ...

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    • Folder icon If required - Valuation
      • Item icon Letter instructing valuer - Lease extension valuation
    • Item icon Timetable
      Initial notice The formal statutory procedure for acquiring a new lease is commenced by service of a Notice of Claim to Extend Lease (Tenant), known as a s 42 notice, on the competent landlord and copies on any intermediate landlords.

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    • Item icon Counter-notice by the landlord
      On receipt of the tenant’s notice of claim, the landlord has 21 days to ask the tenant for evidence of the tenant’s ownership and how long the tenant has owned the flat. This is easily dealt with by the tenant providing the landlord with a copy of the leasehold title entries. Such evidence is ...

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    • Item icon Letter to tenant's solicitor requesting evidence of ownership
    • Item icon Letter to tenant's solicitor with notice of inspection for valuation
    • Item icon Letter to tenant's solicitor requesting payment of deposit
    • Item icon Letter to tenant's solicitor serving counter notice
    • Item icon Landlord’s counter notice Section 45
    • Item icon Landlord’s counter notice (Section 45(b))
    • Item icon Letter to tenant's solicitor rejecting incomplete notice
    • Folder icon If required - Application for price determination
      • Item icon Letter to tribunal filing application
      • Item icon Application for determination of premium or other terms of acquisition remaining in dispute. Flats and premises - Lease renewal
      • Item icon Letter to other side's solicitor serving application for determination with supporting documents
    • Item icon Assignment of a tenant’s claim to extend the lease
      When a tenant is selling their flat, it is possible to assign the benefit of the tenant’s claim to the buyer through a formal deed of assignment. This will allow the buyer to acquire a lease extension after completing the purchase.

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  • Folder icon C. Completion and the conveyancing process
    • Item icon Completion and the conveyancing process
      There is a statutory conveyancing procedure triggered by the agreement of the premium price for the lease extension. See s 48 of the Leasehold Reform, Housing and Urban Development Act 1993 and The Leasehold Reform (Collective Enfranchisement and Lease Renewal) Regulations 1993. Within ...

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    • Item icon Deed of surrender and regrant of lease
    • Item icon Deed of variation - Lease extension for flat
    • Item icon Letter to tenant's solicitor enclosing lease extension documents
    • Item icon Letter to client enclosing lease extension documents for signing
    • Item icon Notice to complete by way of letter of service
    • Item icon Registration
      After completion, the new lease is registered at the Land Registry. Any Stamp Duty Land Tax (England) or Land Transaction Tax (Wales) is paid. The extended lease is a new lease, granted by a deed of surrender and re-grant of the existing lease.

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    • Item icon Letter to Land Registry enclosing AP1 to change the register and supporting documents
    • Item icon Letter to landlord confirming Land Registry registration
    • Item icon Letter to tenant confirming registration at the Land Registry
    • Item icon Withdrawal and termination
      The tenant can withdraw from the lease extension procedure:

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    • Item icon Letter to Land Registry cancelling notice
  • Folder icon D. Finalising the matter
    • Item icon Letter to client finalising the matter
    • Item icon Example invoice
    • Item icon Closing the file
    • Item icon File closing checklist
    • Item icon File review form - General
  • Item icon Comments and suggestions for By Lawyers

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