The majority of all applications for a lease extension are settled by agreement between the leaseholder and the freeholder. However in the very few cases when agreement of the terms cannot be reached, the leaseholder can make an application for the terms to be settled by the Leasehold Valuation Tribunal (LVT).
It is also necessary to make an application to the LVT in cases when a leaseholder wants an extension of the lease but the landlord is missing and cannot be traced.
The decisions of the Tribunal are relevant to all applications for lease extensions. They will interpret provisions of the Leasehold Reform, Housing and Urban Development Act 1993, and lay down rules as to how valuations are to be determined in particular circumstances.
Rare for cases to have to go to the Tribunal
So although it is rare for cases to have to go to the Tribunal, its decisions are often relevant to all cases and are noted by Solicitors and Surveyors who handle applications under the 1993 Act. It may therefore help to have some understanding of what the Tribunal is and how it operates.
The LVT is a quasi-judicial body, which has powers under various legislation to settle certain types of dispute which would otherwise have to be dealt with by the Courts. The Tribunal is independent of the parties to an application, and its members are appointed by the appointed by the Lord Chancellor. There are two types of member:
- The chairman, usually a Solicitor or surveyor.
- Other members, who may be lawyers, surveyors, other professional persons or lay persons.
At a formal hearing the tribunal usually consists of the chairman and one or two other members. However a chairman can deal with some cases on his own.
Formal hearings are not always necessary
Formal hearings are not always necessary, and the parties can agree for the application to be settled on the basis of written submissions and evidence alone.
While the LVT is intended to provide a simpler method of justice than in the Courts, lease extension cases frequently involve complicated technical arguments on valuation. So while an application can be made direct by the leaseholder, HM Courts and Tribunals service advises that an expert valuation may well be advantageous to a party’s case. (http://hmctsformfinder. justice.gov.uk/courtfinder/forms/t543-eng.pdf) Freeholders will invariably instruct their own expert surveyors and Solicitors, so it makes sense for the leaseholder to do likewise.
While the amount of the premium to be paid for the extension is often the most important matter to be resolved by the LVT, they also have power to determine cases where one or both parties seek variations in the lease. Such variations may include adding, removing or amending provisions in the existing lease, e.g. extending the items which the landlord can include in service charges.
Sometimes applications are made to vary the extent of the property included in the lease, to reflect the actual area used by the tenant.
Variations to a lease which might appear insignificant and uncontroversial to a layman can affect the ability to get a mortgage on a property and therefore impact on its value. If there is already a mortgage on the property, any variations which would not be acceptable to the lender cannot be agreed. So advice from a Solicitor is essential if any request is made for a variation of the lease.
Fortunately it is rarely necessary for lease extension applications to go to the LVT. But when this is the only way for a case to be settled it is immensely helpful for the leaseholder to be able to rely on his Solicitor and surveyor to handle the case and give expert evidence.
Fridaysmove’s expert team can deal with every aspect of lease extensions. Call us and we would be happy to answer any questions you may have.