Extended a lease under the Notice section 42
A Section 42 Notice is used to start the process of the leaseholder requesting the landlord to extend their lease on a property.
This provides a leaseholder with an extension of 90 years in addition to the remaining lease term and a ground rent reduced to zero.
You should use a qualified person to act for you, seek guidance from a registered RICS surveyor.
With the professional expertise of a qualified surveyor, your notice should include a proposal to pay the market value premium for the lease extension that you are seeking. The premium a lessor may request is based on the value of the flat or house, real estate values are currently on the decline. The lessee should consider carefully if the market is going to decline further, before seeking to have the flat or house valued for the purpose of seeking a new lease.
Upon the Section 42 Notice been served, the landlord has two months to respond with a Counter-Notice. The counter-notice will either accept or reject the claim and the price offered for the premium.
In the event the freeholder refuses to accept the lease premium, there will be two months for the parties to negotiate further.
However, if you do serve a Section 42, yourself, this must be completed correctly without errors. A faulty section 42 notice is something a freeholder can challenge in court and may be dismissed by a judge.
The consequences of serving a defective section 42 notice are far-reaching. If it is challenged in court and the notice is deemed as defective, you will very likely have to pay the landlords legal costs.
Further, you will be prevented from serving another section 42 notice on the landlord for 12 months.
What are the contents of a Section 42 Notice?
The contents of section 42 Notice are set out in the Leasehold Reform, Housing, and Urban Development Act of 1993. The notice should include the following information.
• The tenant’s full name and address of the property for which lease extension is sought.
• Identity of the property with sufficient provision of its particulars.
• Information on the tenant’s initial lease. This should include the commencement date of the lease, the terms around the lease, the lease term, and the date the lease term commenced.
• The proposed premium offered to the freeholder in respect of granting lease extension for the property in question.
• Proposed terms by the leaseholder on the lease extension.
• Contact information for the solicitor, appointed to act on behalf of the leaseholder.
• To stipulate the date, the leaseholder requires the landlord or freeholder to serve a Section 45 Counter-Notice in response to the Section 42 Notice. The response date required from the owner must be above the 2-month threshold required in servicing of a section 45 Counter-Notice.
When can I serve a section 42 notice to extend your lease?
The criteria are, the lease must be for more than 21 years, and you must have owned the property for two years or more.
In certain situations, you cannot seek an extension of the lease and Notice section 42 is not applicable like:
If your landlord is a charitable housing trust or:
If it is a business or commercial lease.
Can my landlord refuse to extend my lease?
No, if you qualify for a lease extension, the landlord cannot refuse an extension. The common reason for contention between the parties is due to the owner wanting more money for the lease extension.
Most leaseholders have the statutory lease extension procedure in place. Under the Leasehold Reform, Housing and Urban Development Act 1993, leaseholders will need to qualify to have the right to extend their leases. To be eligible for a lease extension, you would usually need to the flat or house for at least two years or more.
For the owner of a property, upon receiving a Section 42, you must respond in a timely manner.
Landlords who fail to respond to a section 42 notice may find they are bound to the grant given by the leaseholder. Which means you lose your right to negotiate the premium that has been offered.
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Should you need, further advice and you are a member of the British landlord association you can ring our helpline. If you are not a member of the British Landlords association you can join for free.
British Landlord Association
Author: Simon Hampton
Date: 9th of July 2020
Disclaimer:
This post is for general use only and is not intended to offer legal, tax, or investment advice; it may be out of date, incorrect, or maybe a guest post. You are required to seek legal advice from a solicitor before acting on anything written hereinabove.
