Q. I have a lease of a flat that now has less than 70 years left to run. I have read that I might have trouble selling or getting a mortgage. Can I extend my lease?
A. There is a legal right for a leaseholder to extend their lease once they have owned it for two years. The right is to add 90 years to what is left on the existing lease at a "peppercorn rent" (i.e. no ground rent is payable). For example, if your lease has 70 years left to run, the new and extended lease would be for 160 years.
The landlord is entitled to a premium for the lease extension based on a particular formula and advice on the premium should be obtained from a specialist surveyor. You will probably have to pay the landlord’s legal and surveying fees in addition to the premium and your own professional fees. If agreement cannot be reached with the landlord about the premium or other terms, the matter can be referred to a tribunal for a decision.
Q: I have a lease of a shop that is coming to an end and I do not want to renew my lease. My landlord has mentioned that the property is in a poor condition, but I know that the landlord has planning permission to convert the shop into flats once I leave. How should I respond to the landlord?
If you have repairing obligations under the lease and you haven’t complied with those obligations, then the landlord may be able to look to you for the cost of putting the property back into repair. This process is started by the landlord serving a schedule of dilapidations.
The schedule should highlight the part(s) of the property in disrepair, what works are needed, and what the works will cost. If the landlord is following the relevant protocol for these types of claims, you will have the opportunity to respond fully to the schedule and the assistance of a building surveyor may be required. The landlord should not issue any court proceedings against you until all steps under the protocol have been exhausted.
However, by law, the landlord is prevented from recovering any money from a tenant where it can be shown that the property, regardless of condition, is to be pulled down or where structural alterations are to be carried out when the lease ends that would render any repairs pointless. This may be relevant here and should be considered as part of any response you provide to the schedule.
If you would like to discuss the issues detailed above please contact Mark Steggles, Partner, 01892 701273