How long does a lease extension take?

 A statutory lease extension allows leaseholders to extend the lease of a flat by 90 years and replace the ground rent with a peppercorn. A peppercorn means nothing or nil. This is a legal right that your landlord cannot ignore.

This process offers a number of benefits over informal lease extensions, which can land you with an onerous ground rent or wasted legal costs if the freeholder pulls out.

One of the key benefits of this route is the statutory deadlines. If you have experienced an unresponsive freeholder who is slow to reply, there is no substitute for serving a s.42 notice and letting the legal deadlines do the heavy lifting. If a freeholder fails to reply, the leaseholder obtains a windfall of a lower lease premium (the amount set out in the claim notice).

Here, we explore the timeline and factors affecting how long a lease extension takes and importantly, how you can help to move things along.

The stages of a statutory lease extension

 There are several key stages, which follow this order:

1. Valuation and preparation:

Before initiating the process, leaseholders must obtain a valuation from a leasehold valuer to determine the premium (the part payable to the freeholder) for extending the lease. This should take around two weeks from paying your valuers invoice to carry out the work (get in touch if you need pointing in the direction of experienced valuers for quotes).

Your leasehold solicitor will be preparing the s.42 and researching how best to serve this, and who to serve it on (including intermediate landlords, management companies or missing landlords).

2. Serving the section 42 Notice:

Serving the s.42 formally starts the lease extension claim and sets the valuation date as of the date the notice is received. For leases with just over 80 years, it is crucial to do this before marriage value kicks in. This notice sets out your opening offer for the price of the new lease (note this is not the figure obtained from a lease extension calculator, you must offer lower to open the negotiations and protect your position). Expect this to take two weeks from the point your valuation is completed.

3. Landlord's counter offer

The freeholder has two months from receiving the Section 42 Notice to respond with a Counter-Notice.

In rare cases, this may deny the right to extend the term. However in the majority of cases it will accept the claim but counter propose a higher amount for the premium. Do not be deterred if this is a high amount, as it is just your landlords opening shot and this figure will come down in negotiations. Also bear in mind that the negotiations come down to lots of variables, and its not simply a case of splitting the difference (although you are free to make a without prejudice offer to settle at any time and this does sometimes result in a swift agreement).

4. Negotiations over price and lease terms

After receiving the counter notice, both parties negotiate terms such as the premium and any clauses to be added to or changed within the lease. The law gives up to six months to reach agreement otherwise an FTT must be made to stop your new lease claim from being withdraw.

If the six month deadline is missed, you still have to pay your landlords legal and valuation fees to that point and the process comes to an end, meaning you have to start again with a fresh s.42 notice; this is very much to be avoided.

 5. Tribunal application if negotiations don't conclude within six months (not applicable in all cases):

If negotiations don't result in agreement within six months, or if after two months there is not much movement, either side can apply to the First-tier Tribunal to have the price determined by an independent Tribunal. In case which involve the freeholder seeking lots of amendments to the lease that they are not entitled to, we recommend making the FTT application as early as possible rather than wasting time only to issue the application near the end of the six month deadline.

You are looking at between four to twelve months to work through the Tribunal process, should it be required. However the issue of the application by the leaseholders solicitors usually brings the freeholder to the negotiating table, and this is a useful method to apply pressure without ever heading to an expensive hearing. It is said that fewer than 1% of FTT applications end up at an actual Tribunal hearing, an these are usually prime central London properties or those with very short leases of less than 50 years, where the variables in the valuation can result in huge swings in the premium payable.

6. Completion:

Once the price is agreed or determined by the FTT, the parties must formally complete within 4 months. Though we typically see completion happening within one to two months of this point (allowing from for documents to be signed and the completion statement to be prepared, including the payment of outstanding service charges or ground rent on completion).

7. Registration with Land Registry:

After completion, registering the new lease with the Land Registry can take an additional three to twelve months from submitting the application, but you can ask your solicitor to expedite the application, and it should be dealt with within 10 working days.

There must be a good reason for this and evidence, such as the property being on the market or a remortgage offer running out

Total time required

The total duration of a statutory lease extension lays somewhere between four months (for a smooth process with cooperative parties) and twelve months, or in come cases (such as this one, over two years). 

Can you speed up the process? What our Brighton based leasehold solicitor says

Ricky Coleman, a solicitor who has handled hundreds of lease extensions in Brighton and beyond, states "that you can help move things along by preparing for the process by taking the following steps:

1. complete any client onboarding steps quickly - a lot of time is lost to waiting for ID checks to complete or money on account to start off the process

2. have a copy of your latest service charge or ground rent demand scanned in and ready to provide to your solicitors

3. have funds available to pay the statutory deposit, any interim bills, your valuers fee and ultimately, the completion sum - moving the completion date back due to unavailable funds pushes up freeholder legal costs and adds weeks or months to the process

4. be ready to provide access to the flat if the landlords valuer asks to inspect in order to complete their valuation - we have seen many cases whereby this simple aspect delays the freeholders valuation, and ultimately the time take to serve their counter notice"