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Are Which? right about DIY lease extension advice?

Are you better-off negotiating a lease extension with your landlord informally, instead of going through the statutory procedures? A recent article on the ‘Which’ site suggested that this was a more civilised way of doing things, as well as a potential way to save money by not needing to instruct a solicitor to negotiate the premium for the new lease.  

Although an highly informative article, we would point out that the majority of solicitors do not undertake the negotiation itself. A small number of solicitors, including Fridaysmove members, are however able to carry out lease extension premium negotiations.

The article states that you have to have a solicitor serve a ‘Section 42’ notice” (this is the statutory notice requesting a lease extension. )  In fact anyone can prepare and serve a Section 42 notice, you don’t need a Solicitor for this. So in fact you can do this as a leaseholder on a DIY basis.  However it is easy to get it wrong and, if you do, it can prevent you from serving a further notice for some time.

The article says that “the ‘informal leasehold purchase’ process isn’t widely publicised, and (for good reason) not many solicitors want to draw your attention to it. ” In fact Solicitors don’t object to leaseholders negotiating direct with landlords to agree terms, and I would agree that this can save time and money.  

Will D-I-Y really save you money?

Solicitors also see what happens when things go wrong. So if you want to do a DIY job, it pays to know what you are doing and whether you will save money in the long run. If you are going to negotiate direct, how will you know what is a fair amount to pay, unless you have got your own professional valuation?

It can certainly be a good idea to approach a freeholder informally to see if they are willing to negotiate a lease extension, before serving a formal notice. If you have not owned the property for two years and so are not entitled to a statutory extension, this will be the only way to proceed. You may save the legal costs in connection with serving a S42 notice, but remember that you will still be asked to pay the freeholder’s legal and surveyors fees.  

Is it somehow more ‘civilised’ to approach the freeholder direct, rather than serving a notice? This may be the case when the freeholder is a private individual, but often you will be dealing with a property company who don’t care one way or the other (and aren’t going to be civilised in the way they treat you!). Some freeholders absolutely refuse to negotiate until a S42 notice has been served.

Professional valuations are a must

In any case freeholders will usually want to have their own professional valuation carried out (which you pay for. ) Don’t forget that this is the landlord’s valuation, so may be much higher than a fair valuation. So it does make sense to get your own valuation done, to know that you are not being ripped off.

Solicitors recommend using the statutory procedure because otherwise freeholders often foist terms on clients which they would not have to accept. These can include:

  • not agreeing to extend for the full 90 years
  • requiring a substantial increase in the annual ground rent
  • requiring regular increases in ground rent, e.g. doubling every ten years
  • inserting variations to the lease, such as making the leaseholder responsible for more items in the service charge

Whether terms are agreed informally or under the statutory procedure, you should note that a new lease document is required, which has to be registered at the land registry. Most people prefer to instruct a Solicitor to deal with this. (yes, you can do the legal work yourself if you want to, but this might be a bit tricky when you have a mortgage on your property. )


Read the which article at: 


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