In short, a lease extension can be refused sometimes – but it depends on your particular circumstances. If you have made an application to extend your lease and your freeholder refuses your request, your initial reaction (following a few ‘interesting’ words) will be to ask “can a freeholder refuse to extend a lease”?
Do you have a question about extending your lease? Call our specialist leasehold team on FREEPHONE 0800 1404544 for FREE no strings attached initial phone advice
The need for Lease Extension Specialists
Few solicitors handle lease extensions on a regular basis – even experienced conveyancers.
But, in contrast, our 5 strong leasehold team are genuine experts – lease extension and freehold purchase work is all they do. In fact, over the last 20 years we have helped in the region of 10,000 leaseholders throughout England and Wales successfully extend their leases. And what’s more, we are the only solicitors recommended for this kind of work by the HomeOwners Alliance – the nation’s premier organisation fighting for the interests of the UK’s homeowners.
So in instructing us here at Bonallack and Bishop, you can rely on the expertise of our team.
What are my lease extension rights?
The starting position is the Leasehold Reform Housing & Urban Development Act 1993. That gives you the legal right to a lease extension – in exchange for a premium (sum of money), a leaseholder:
· who has lived in their property for two years or more, and
· has a lease which was originally granted for more than 21 years
has the statutory right to extend their lease for 90 years. This kind of lease extension is referred to as statutory or formal.
As you can see from the paragraph above, a freeholder can decline to extend your lease if you have not lived in the property for two years or more. However, you may be able to negotiate a lease extension if you have lived in the property for less than two years through an informal lease extension, but you will need to be prepared to pay a greater premium.
NB if you are about to buy a property with a short lease and you don’t want to wait 2 years for applying for your statutory or formal lease extension, then, provided the current vendors has owned the property for at least 2 years, they can put in the formal section 42 notice (there’s no cost in doing that) and then on completion transfer the benefit of that application to you, the purchaser. This allows you to crack on with your lease extension immediately without any delay.
Click here to read more about statutory lease extensions
Getting the procedure wrong gives your freeholder the ability to refuse your lease extension
If you are using the statutory route to extend your lease, then your solicitor will need to follow the process very carefully. Making a mistake, such as allowing an error in the initial section 42 application or missing a deadline of the timetable could allow your freeholder to simply refuse your lease extension. This will call further delay and you will be liable for both your own and your freehold is wasted legal and surveyor’s costs.
Click here to read more about the lease extension process and how to extend a lease
Are any types of property exempt from the right to extend my lease?
Yes – the following types of property are exempt from your right for lease extension and will give your freeholder the ability to refuse to extend your lease
• commercial property – your lease must be a residential lease. There is no right to lease extension for commercial premises
• your flat is owned by a charitable housing trust and is let to you in the course of the charity’s work
• property within cathedral boundaries
• property owned by the Crown. However this is not normally a problem in practice – because of though technically down by the Crown is exempt from lease extension, the Crown do routinely cooperate with any application for lease extension on qualifying residential property
NB property owned by the National Trust is excluded from the right to an automatic 90 year statutory lease extension – although there is an alternative right to a 50-year extension under the Leasehold Reform Act 1967. However the situation is complex. Contact our solicitors if think this applies to you and you want to discuss this further
My freeholder wants to demolish or remodel my property
This is another reason where you might have difficulties with a lease extension. Fortunately, it’s very rarely used, but if your freeholder can prove they are planning to demolish or remodel your property, then that is a valid reason to refuse to extend your lease. Its use is even more restricted – your freeholder can only rely on it where the remaining lease term is under than five years from the date the leaseholder’s formal s42 lease extension notice was submitted.
Can a freeholder refuse to extend a lease if the request is made informally?
Informal, voluntary or private lease extensions are risky. That’s why we often advise clients to use the statutory route instead.
If you choose to cut out the Leasehold Reform Housing & Urban Development Act 1993 and approach your landlord directly asking them to extend your lease, you have no legal right to back you up. So, for example, your landlord can pull out of negotiations at any time, or increase the price they are asking – and there’s nothing you can do about it.
Using the informal route, your freeholder can also simply refuse to extend your lease. Therefore, if you are purchasing a leasehold property with a short lease (under 70 years), really important to get the right legal advice from a specialist Lease Extension Solicitor. Without expert legal advice on the possible risks of purchasing such a property, you may find yourself lumbered with a flat or house you will have considerable difficulty selling except to a cash buyer, probably for a much lower price.
Can my freeholder refuse to extend my lease if we can’t agree a price?
No – in the unusual event that the freeholder’s and leaseholders valuers can’t negotiate and agree a premium to pay for the lease extension, the matter can be referred to the First-Tier Property Tribunal, who will set a price
When should I extend my lease?
At all possible it’s important that you extend your lease before it runs down to under 80 years. This is because if you come to renew a lease with less than 80 years to run, it’s going to cost you more. Once that lease term drops below 80 years, you will need to pay an additional sum, referred to as the ‘marriage value’, to the freeholder. And depending on the value of your flat, that’s likely to cost you thousands of pounds more – possibly a lot more.
And once your lease starts dropping even lower – to 65 or 70 years, a new problem emerges. There will be increasingly few lenders happy to lend on such a short lease – and that could make you shark bait for cash buyers
You might also be interested in reading the following:
Missing freeholders and lease extension – how our team can help you extend your lease even with an absent freeholder