The Lease Extension Guide: Part 4 – what happens after the Initial Notice? An overview of the rest of the process.

What happens after the leaseholder serves the Initial Notice?

Part 3 of the Guide describes how a leaseholder can commence the statutory lease extension process, and the consequences of serving the Initial Notice. After that, the landlord will then have 2 months in which to obtain his own valuation and respond with a counter notice which will invariably require a higher price for the lease extension.

If the landlord fails to respond then he is deemed to accept the leaseholders request for a lease extension on the terms set out in their Initial Notice. In these circumstances, the leaseholder’s solicitor would need to apply to court to compel the landlord to grant a new lease.

Providing the landlord responds with a counter notice, the parties then have a period of 2 months to agree the premium (price) payable for the lease extension. If the matter is not concluded in that time, then either party may apply to the First-tier Tribunal (Property Chamber) (FTT) for a determination of the price to be paid.

The costs of taking the matter to the FTT are not recoverable from the losing party and it is likely that the matter will only be referred to the FTT in the event that the parties are very far apart in terms of the premium payable.

There is a cut-off date of 6 months from service of the landlord’s counter notice for the parties to agree the price and the terms of the new lease.  If these have not been agreed, then the leaseholder’s solicitor must make an application to the FTT otherwise the leaseholder’s claim will be deemed to be withdrawn.

It is usually the surveyor who deals with the negotiations about the premium as the arguments tend to relate to the valuation mechanisms under the legislation. There may also be arguments about the terms of the new lease, which will be dealt with by the solicitors.

Once matters are agreed, either by negotiations or through the FTT, a new lease is granted in place of the existing lease.

There is a further cut off date of 4 months from when terms are agreed if the transaction has not been completed. In this case, the leaseholder’s solicitor must make an application to the County Court to enforce the grant of the lease otherwise again, the claim will be deemed to be withdrawn.

Part 5 of The Lease Extension Guide will consider what a leaseholder can do if they are selling their flat with a short lease, or if the buyer is requesting that the leaseholder extend it.

We are experts in this area and we have an experienced Residential Property team and Property Disputes team who can assist leaseholders and landlords with lease extension and lease enfranchisement matters.