Extending Leases

Expert advice from our award-winning leasehold enfranchisement & commercial property team

Here at Hart Brown, our expert team of award-winning leasehold enfranchisement and commercial property team are on hand to give you advice on all areas of commercial lease extension and rights. Our leasehold extension solicitors understand that the process of extending a lease can be daunting and that you may have many questions. Below you will find some common questions about commercial lease renewal answered.

Why do I need to extend my lease?

A lease is a diminishing asset. As the lease term reduces the value of the lease reduces. It is important and your right to ask to extend your lease. Ultimately your commercial property may become difficult or impossible to sell or re-mortgage or diminish in its market value if the lease term is short. You should at all times be familiar with the length of term left on your lease. The longer you leave it to extend your lease the more expensive it may become. Consider, very carefully, the length left of the lease of any property that you are purchasing and ask questions of your advisors about extending the lease BEFORE you exchange contracts. If you are considering selling your flat, take EARLY ADVICE before you want or need to sell. Our team of leasehold enfranchisement and commercial property experts are always on hand to provide expert advice. A purchaser may require you to extend the lease before they are willing to exchange contracts.

For leases that have less than 80 years to run on the term, marriage value is payable to the landlord as part of the premium. Marriage value increases that premium. If your lease is approaching this milestone you should seek advice URGENTLY.

How do I extend my lease?

Subject to meeting certain criteria business tenants have a statutory right under the Landlord and Tenant Act 1954 to extend the contractual term of their lease. If the current lease is nearing the end of its term, then the tenant has the right to apply for a lease extension. If you are purchasing a business property, you should take advice BEFORE exchanging contracts as to whether you should request that your seller starts the process in order to avoid a 2-year delay and increase in premium, once you have completed.

The Landlord and Tenant Act 1954 provides that eligible lessees are entitled to a new lease on the same terms as their existing lease but with the term extended by 90 years and the ground rent reduced to a peppercorn.

The process is fixed by the Act and involves the service of a formal claim notice upon your landlord(s). Your landlord(s) will have the opportunity to serve a counter-notice, this may be a commercial lease renewal rent increase. You may find yourself asking can a landlord refuse to renew a commercial lease? Our lease enfranchisement and commercial property experts will be able to offer advice and liaise with the landlord to reach a suitable outcome. In the majority of cases, your advisors will be able to negotiate a suitable settlement as to the premium payable and any other amendments to the terms of your existing lease. If negotiations fail the First Tier Tribunal (Property Chamber) has jurisdiction to determine the premium and any other terms not agreed.

You can approach your landlord informally before commencing the statutory procedure to find out if they are willing to grant a lease extension without the need to follow that procedure BUT BEWARE AND TAKE ADVICE FROM YOUR ADVISORS! Informal offers by landlords may look attractive but in fact may make the situation worse.

What costs are involved?

A premium is payable to the landlord(s). You will need to obtain, at the outset, a professional valuation from a qualified valuer surveyor. The premium payable depends on many variables including length of the lease, market value of the flat and ground rents payable.

In addition to the premium, you will be responsible for paying your own legal and valuation fees and any disbursements such as Land Registry fees and any SDLT. You will also be responsible for paying the landlords(s) reasonable legal and valuation fees, however this does not extend to paying for any fees the landlord(s) incur in negotiations with you or in connection with a Tribunal application.

Be aware that once a claim notice is served the landlord can request you pay a deposit equal to 10% of the proposed premium. You will need to ensure the deposit funds are available from the outset and the remainder of the premium and costs will be available at completion. The whole process can take 6-8 months to complete.

Are there any alternatives?

You should speak to your fellow lessees as soon as possible. You may be able to make your claim for a lease extension at the same time as one or more of your fellow lessees. This is likely to save some costs if you instruct the same solicitor and valuer. You should also discuss with your fellow lessees whether Collective Enfranchisement is of interest. The Act provides a right for a majority of long lessees who own flats in a building to purchase the freehold of that building. There are strict qualification criteria so legal and valuation advice is essential. Please refer to our guide on Collective Enfranchisement.

How can Hart Brown Solicitors help me?

Our award-winning leasehold enfranchisement and commercial property team have the specialist knowledge, expertise and experience to advise you in respect of lease extensions. They can assist you in determining when your lease may need to be extended, guide you through the procedure and likely costs involved in more detail and of course act for you in connection with the claim itself.

Get in contact today by calling us on 01483 887766, email or via live chat below. Our team are always more than happy to talk you through your options.

Who to Contact

Sarah Osborne

Partner, Head of Leasehold Enfranchisement

Partner, Head of Leasehold Enfranchisement

Sarah Osborne

Sarah is a Partner at Hart Brown and the Head of Leasehold Enfranchisement. Enfranchisement is a niche area of property law that entitles flat owners to take over control and ownership of their building.

Sarah brings 13 years' experience to the firm and to her role, having practised as a Licenced Conveyancer between 2005 – 2013, and as a Solicitor from 2013 onwards.

Clients value Sarah's depth of experience and pro-active approach to each case.

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