A lease extension is available to all long leaseholders who have held their lease for at least two years. The terms of your lease will largely remain the same except you can add 90 years to the time left on your old lease and you will no longer be expected to pay ground rent.
You will not have the right to renew if:
Trap 1 - failure by the tenant to complete the new lease within 4 months of reaching an agreement after service of a notice and counter notice
If the terms are agreed and no binding contract has been entered in to by both parties, the lessee has 4 months from the date the terms were agreed to apply to the county court for a vesting order if the landlord delays completing on the agreed terms. If the landlord fails to complete on the agreed terms within 4 months from the date all the terms are agreed the lessee’s notice is deemed to be withdrawn, unless an application for a vesting order is made prior to the 4 months period.
Trap 2 - failure by the landlord to serve a valid counter notice within 2 months
Whilst the lessee can serve another notice if the first is invalid, the landlord does not have this protection so it is crucial that the counter notice is valid. Where the counter notice is invalid a lessee has a right to apply to the county court for a new lease extension on the terms set out in his section 42 notice or where an application to acquire the freehold was initiated by a section 13 notice apply to the court for an order determining the terms on which it is to acquire the freehold in accordance with the proposals contained in the initial notice. Following the case of Willingale v Globalgrange Limited the Court of Appeal has found that where a lessee can establish their statutory right be it for a lease extension or to collectively enfranchise the court must make an order in favour of the leaseholder. The effect of serving an invalid counter notice has serious consequences for the landlord, however the lessee must respond as the law provides if they want to take advantage of the position.
Trap 3 - failure by the tenant to apply to the Leasehold Valuation Tribunal to determine the terms of the new lease within six months of the counter notice
Where a counter notice is served by the landlord admitting the tenant’s right to a new lease but disputing the terms, the tenant must apply to the Leasehold Valuation Tribunal to determine the terms of the new lease within six months of receipt of the counter notice. Failure to make an application will result in the tenant’s notice of claim being deemed as withdrawn. The consequence of deemed withdrawal for a lessee is that not only will he be responsible for his own legal and third party costs but also the reasonable legal and third party costs of the landlord and will have to wait 12 months before he can start the process again.
Trap 4 - failure by the tenant to apply to the court for a vesting order
Where no counter notice is served by the landlord or he serves an invalid notice, an application to the court must be made by the lessee no later than six months after the date by which the counter notice should have been served. Failing which the lessee’s notice is deemed to be withdrawn, unless the parties agree the terms and complete the transaction without having to go to court.
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