Lease extensions

Grant of new lease or lease extension

This process is governed by the Leasehold Reform, Housing and Urban Development Act 1993 (as amended by the Commonhold and Leasehold Reform Act 2002).

The formal process to exercise the right to acquire a new lease commences by the service of the tenant’s notice in terms of Section 42 of the Act on the Mayor and Burgesses of the London Borough of Greenwich, now known as Royal Borough of Greenwich (the Landlord). The Landlord will in turn serve a counter notice to the tenant from Section 45 of the Act.There are several important issues the tenant needs to consider before completing and serving the tenant’s notice.

Checking eligibility

To have the right to acquire a new lease, the tenant should have been a qualifying tenant of the flat for the past two years. A person is a qualifying tenant of a flat under a long lease (a lease granted for more than 21 years). A tenant will not be a qualifying tenant if the lease is a business lease.

Assessing the premium payable

The tenant will have to specify in their notice the premium which they propose to pay in respect of the grant of the new lease. The appointment of a qualified valuer is strongly recommended in order to provide the tenant with an idea of the premium (purchase price) payable. In assessing the premium payable for the lease extension, the diminution in value of the Landlord’s interest in the tenant’s flat will be taken into consideration as well as the Landlord’s share of the marriage value and compensation which might be payable to the Landlord for any loss arising from the grant of the new lease. 

Grant of the new lease

Where the tenant of a flat has a right to acquire a new lease of the flat, subject to following the procedure as prescribed by the Act, the Landlord shall be bound to grant the tenant upon payment of the premium (purchase price) a new lease for the flat substituting the existing lease, for a term of 90 years plus the remainder of the term of the existing lease at a peppercorn rent.

The terms of the new lease will be the same as the existing lease, but with such modifications as may be required or appropriate and in compliance with the terms of the Act.

Costs incurred in connection with the new lease

In addition to the premium payable by the tenant for the grant of the new lease where the tenant has served their notice on the Landlord, they shall be liable for the reasonable costs incurred by any relevant person in pursuance of the notice for instant investigation, valuation for fixing the premium, and for the granting of the new lease whether or not the tenant is successful in exercising their right. 

At this stage, the Landlord’s legal fee and disbursements in connection with the grant of the new lease is estimated at £610. However, we may revise our legal costs if the matter becomes more complex than expected. Also, the Landlord’s valuation fee will be in the range of £250.00.

Please note this is not meant as a full interpretation of the law and it was written as guidance for tenants/leaseholders of the Royal Borough of Greenwich. We strongly recommend that tenants seek independent legal advice or instruct a solicitor (and surveyor) to represent them in exercising their rights under the Act.