Rawlins Davy (est. 1832) Solicitors & Mediators for Business and Private Clients.

Lease Extensions for Landlords

Why should I grant a lease extension?

You may have a good relationship with your tenant and wish to maintain this. By agreeing to a lease extension outside the formal legal procedure, almost invariably, the process will be completed sooner and at lesser cost to the tenant.
There is not necessarily a financial benefit to refusing to entertain an offer from the tenant. This is because a tenant can, subject to eligibility, compel you to grant a lease extension. However, if you do advise the tenant that the formal procedure is necessary, your own reasonable legal and valuation costs are effectively covered from the date the procedure is commenced until completion. This ensures your interests will be effectively protected.

Do I have to grant a lease extension?

You are under no obligation to grant a lease extension unless you have received a notice under Section 42 of the Leasehold Reform Housing and Urban Development Act 1993. Such a notice will generally give a period for response of 2 months or slightly more. It is incredibly important for your interests that you formally respond to this within the timeframe given. The result of a failure to respond in the correct format can be the tenant enforcing the terms within their notice via a Court Application. This can be significantly to your financial detriment.
For this reason, we strongly suggest seeking legal advice if you receive such a notice as soon as possible. We would be pleased to advise you on the contents of the notice and your response.

Why should I grant a lease extension?

You may have a good relationship with your tenant and wish to maintain this. By agreeing to a lease extension outside the formal legal procedure, almost invariably, the process will be completed sooner and at lesser cost to the tenant.
There is not necessarily a financial benefit to refusing to entertain an offer from the tenant. This is because a tenant can, subject to eligibility, compel you to grant a lease extension. However, if you do advise the tenant that the formal procedure is necessary, your own reasonable legal and valuation costs are effectively covered from the date the procedure is commenced until completion. This ensures your interests will be effectively protected.

Why should I instruct Rawlins Davy to help me with the process?

Particularly if you are proceeding via the formal notice procedure, we thoroughly recommend considering our services. Acting without professional advice carries risks that you may not comply with the inflexible and precise requirements at each stage of the process. Failure to do so can have serious implications both in terms of your own financial position, and the time it can take to secure the lease extension you are seeking. By a simple mistake, you can risk delays of up to a year, unexpected costs, or even being forced to take a lease extension on terms to which you have not agreed. Beyond this, by consulting our legal professionals you save yourself the stress of learning the procedure as you go along, and you can rest assured that our dedicated team will fight your corner with your best interests in mind.
Rawlins Davy has a team of solicitors able to advise on lease extensions with a combined experience of over 105 years’ practise. With our expertise, you can place your trust in Rawlins Davy guiding you safely through this process at a reasonable and transparent cost.

Formal Lease Extension Process

  1. The tenant will need to check eligibility, and whom the appropriate landlord is. We recommend seeking legal advice at an early stage on these points.
  2. The tenant will also generally want an estimate of the amount the lease extension will cost. We recommend seeking valuation advice from an appropriately qualified surveyor on calculation of a value before proceeding further
  3. The tenant will then serve a formal notice of claim on the landlord, setting out an initial offer and the terms on which the tenant seeks to extend his/her lease. This will trigger a timeframe of a 2 month minimum response period for the landlord. This notice will also trigger the tenant’s liability for the landlord’s costs.
  4. The landlord can request a 10% deposit of the figure within the initial notice at any time after the formal notice is served. The landlord may instruct a legal adviser, request proof of eligibility, and instruct their own valuer to attend the property, again with the aim of calculating the value of the lease extension.
  5. The landlord will then serve a formal counter-notice, indicating which parts of the initial notice of claim are accepted and which are not, with counter-proposals.
  6. Negotiations will often ensue on any points disputed in the counter-notice. These can continue for up to 6 months from the counter-notice. The vast majority of lease extensions are agreed within this timeframe.
  7. However, if the 6 month deadline approaches and no agreement is reached, further substantial costs can be incurred by both parties contesting a determination at the relevant independent Tribunal (a specialised Court). Generally, a Tribunal application will only be considered by the tenant where the parties are unwilling or unable to compromise on significant areas of disagreement. However, even in such situations a tenant may consider a Tribunal application as economical. If the 6 months elapses and no agreement or application is made, the original notice of claim is considered withdrawn. The tenant would then need to wait a further year before re-commencing the procedure. The value of the lease extension will be more costly, and the tenant will be responsible for the landlord’s costs in responding to both the abortive claim, and the fresh claim the following year.
  8. Provided agreement can be reached, a new lease document will then be entered into by both parties, formalising the arrangement. This needs to be registered with HM Land Registry in order for the document to have legal effect.
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What Our Clients Say About Our Services

  • Rawlins Davy have helped us with a number of business legal services - they are professional, friendly and extremely helpful. Would certainly recommend them as the best Solicitors in Bournemouth.

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