Extending the lease with a local authority freeholder

The Benefits of a Statutory Lease Extension from Your Local Authority

For leaseholders in areas like Southwark, Wandsworth, Islington, Croydon, Hounslow, Barking and Dagenham, Luton, Enfield, Newham, and even those bordering Epping Forest, owning a leasehold property can come with the every present issue of the lease becoming shorter as time ticks on. As the lease term shortens, the value of your property can decrease; it can also becoming more difficult to sell or remortgage.

Fortunately, there is a mechanism to address this: the statutory lease extension. When your freeholder is a local authority, pursuing the statutory route offers significant advantages and in many cases is the only option.

What is a Statutory Lease Extension?

A statutory lease extension is a legal process that grants qualifying leaseholders the right to extend their lease by an additional 90 years, in addition to the remaining term, and removes the ground rent. This right is granted to you in law (move details in our guidance note here), and the council cannot refuse.

Why Choose the Statutory Route with a Local Authority Freeholder?

When dealing with a local authority as your freeholder, opting for the statutory lease extension route can be particularly beneficial. While it's possible to negotiate an informal lease extension with many freeholders, local authorities are usually bound by internal rules that mean they must be served with a section 42 notice.

This is our view is not an issue, as the formal route offers some key benefits:

• Remove the usual delays - of the most significant benefits of the statutory route is its structured timeline. Local authorities can be vey slow to deal with on legal matters however once you serve the section 42 notice they must respond within two months or risk having to grant the lease extension or a low premium. This helps to minimise the potential for lengthy delays that can sometimes occur during informal negotiations. Leaseholders in areas like Croydon or Barking and Dagenham, who may have experienced bureaucratic processes, can find this structured approach reassuring.

  
  

• Pay a fair price - The premium payable for a statutory lease extension is calculated using a calculation set by law. This formula takes into account factors such as the current value of the property, the remaining term of the lease, and the ground rent. This ensures that you pay the price prescribed by law for the lease extension, removing the uncertainty and potential for inflated demands that can sometimes arise in informal negotiations. Whether you reside in Islington or Hounslow, this regulated approach offers peace of mind.

  
  

• Certainty - The statutory process is underpinned by law. This means that once the process is initiated correctly, you have a legal right to the lease extension. This provides a level of certainty that informal negotiations may lack. For leaseholders with local authority freeholders, this legal framework offers strong protection against some of the typical complaints that arise when dealing with this type of landlord i.e. no reply or having to repeat yourself many times in communications.

  
  

Local authorities and lease extensions

Many local authorities, such as those in Southwark, Wandsworth, and Newham, have well-established procedures for handling formal lease extension claims. While each authority may have its own internal processes, they are all bound by the same legal framework that applies to private landlords.

Getting started

If your property in areas like Southwark, Wandsworth, Islington, Croydon, Hounslow, Barking and Dagenham, Luton or Newham,  has a local authority as the freeholder and a lease with less than 80 years remaining (and therefore at risk of having to pay marriage value soon), considering a statutory lease extension soon is important. It provides a clear\pathway to extending your lease, ensuring you pay a fair premium and significantly reducing the likelihood of protracted delays. By exercising your statutory right, you can secure the long-term value and marketability of your property.

To initiate the statutory lease extension process, you will need to serve a Section 42 notice on your local authority freeholder. It is highly recommended to seek advice from a qualified surveyor (to conduct a valuation and handle your negotiations over the price) and leasehold solicitor experienced in these matters to ensure the process is followed correctly. You can also benefit from appointing a solicitor familiar with London councils but with a practice outside of London, to keep legal costs down.