Section 42 Notice Lease Extension Cost
The cost of extending a lease using a Section 42 Notice depends on several factors including the premium, valuation fees, legal fees and freeholder’s costs.
For most lease extensions under a Section 42 Notice, the total cost can range from £5,000 to £20,000 or more, depending on the premium and associated fees. Properties with very short leases or high property values may incur higher costs.
For drafting and serving the Section 42 Notice, our lease extension solicitors in London charge a fixed fee from £1,000 to £1500 plus VAT and disbursements.
The Section 42 Notice is your first step to extending your lease. Got questions? call our specialist lease solicitors on 0203 959 7755 for free initial advice.
Table of Contents
- What is a Section 42 Notice?
- Who is Eligible to Extend a Lease?
- Why Should You Extend a Lease?
- How much does it cost to extend a lease using a Section 42 Notice?
- What fees are involved in extending a lease under Section 42?
- Step-by-step procedure for a Section 42 Notice
- How long does the Section 42 lease extension process take?
- Commercial lease extension in London and beyond
- Why choose Moeen & Co. Solicitors for your lease extension?
- How much do solicitors charge for a lease extension using Section 42 Notice?
- Contact lease extension solicitor
What is a Section 42 Notice?
A Section 42 Notice is a formal request submitted by a leaseholder to the freeholder or landlord (or both) to initiate the lease extension process.
This grants the leaseholder an extension of 90 years in addition to the remaining lease term, with the ground rent reduced to zero.
It is governed by the Leasehold Reform, Housing, and Urban Development Act 1993 in England and Wales, which allows leaseholders to extend their leases.
Who is Eligible to Extend a Lease?
Anyone who is a "qualified leaseholder" can extend their lease. You qualify if:
- You have owned the property for at least two years.
- The original lease was for more than 21 years.
If you meet these criteria, you can request your landlord to extend your lease under better terms.
Why Should You Extend a Lease?
- Increase Property Value: Extending a lease with less than 80 years can greatly increase your property's value.
- Ease of Sale: A short lease limits buyers, as most lenders, won't lend against it. This means only cash buyers are interested.
- Remortgaging Challenges: Properties with short leases are hard to remortgage.
- Rising Extension Costs: The cost to extend a lease goes up as the lease gets shorter.
- Avoiding Marriage Value: Once the lease is below 80 years, the freeholder gets 50% of the lease extension value. This makes costs higher.
How much does it cost to extend a lease using a Section 42 Notice?
Extending a lease using a Section 42 Notice can cost between £5,000 to £20,000 including the premium, valuation fees, legal fees, and freeholder’s expenses.
The cost of a lease extension can vary significantly based on factors such as the property's value, lease length, and how complex it is. Costs can rise if you need to go to a tribunal or if the property is very valuable.
What fees are involved in extending a lease under Section 42?
Extending a lease via a Section 42 Notice typically involves the following fees:
- Lease Premium: Payment made to the freeholder.
- Valuation Fees: For determining the lease extension value.
- Legal Fees: For preparing and serving the notice.
- Stamp Duty Land Tax (SDLT): Applicable on higher premiums.
- Tribunal Fees: If disputes require resolution.
Step-by-step procedure for a Section 42 Notice
The Section 42 Notice process is a formal way for leaseholders in England and Wales to extend their lease. Here's a step-by-step guide:
Step 1: Check Eligibility
Make sure you can serve a Section 42 Notice:
- You must have owned the property for at least two years.
- The original lease term must exceed 21 years.
Step 2: Appoint a Surveyor for Valuation
Get a surveyor who knows about lease extensions to work out a fair premium. This premium will be the basis of your offer in the Section 42 Notice.
Step 3: Engage a Lease Solicitor
Our lease solicitors will draft the Section 42 Notice to initiate a lease extension under the Leasehold Reform, Housing, and Urban Development Act 1993.
Step 4: Serve the Section 42 Notice
Our lease solicitor in London will draft and serve the Section 42 Notice to the freeholder or their representative to start the lease extension process.
The Section 42 Notice will include:
- Details of the property and leaseholder.
- The proposed premium for the lease extension.
- A deadline for the freeholder to respond (minimum two months).
Step 5: Freeholder Responds (Section 45 Notice)
The freeholder must reply with a counter-notice (Section 45 Notice) within two months of getting the Section 42 Notice.
They can:
- Accept the proposed terms.
- Propose different terms.
Step 6: Negotiation Period
If the freeholder disputes the premium or other terms, both parties enter negotiations, which can continue for up to two months.
Step 7: Referral to Tribunal (if necessary)
If you can't agree, you can refer the issue to the First-tier Tribunal (Property Chamber). The tribunal will decide on a fair premium and solve any disputes.
Step 8: Complete the Lease Extension
Once you agree on terms or the tribunal decides, the lease extension is finalised. Both sides sign the new lease, and it's registered with the Land Registry.
How long does the Section 42 lease extension process take?
The lease extension process via a Section 42 Notice typically takes 4 to 12 months, though the timeline may vary based on the complexity of the case.
The process involves several steps that can take months:
- Getting valuation advice.
- Serving a Section 42 Notice.
- Waiting for the freeholder’s counter-notice (Section 45), which must be issued within two months.
After the counter-notice, negotiations usually last two months. If no deal is made, the case might go to the Leasehold Valuation Tribunal. This could make the process take over a year.
Commercial lease extension in London and beyond
At Moeen & Co. Solicitors, we offer our lease extension services to businesses throughout England and Wales, not just in London. Our experienced solicitors have successfully navigated the complexities of commercial lease extensions for clients in various regions, utilising their comprehensive understanding of the local property market to offer tailored solutions.
If you have any questions about commercial lease extension in London, or throughout the UK, don't hesitate to contact us today at 0203 959 7755 or through our online contact form. Our experienced team of solicitors is here to help you achieve the best outcome for your business.
Why choose Moeen & Co. Solicitors for your lease extension?
At Moeen & Co. Solicitors, we have a strong commitment to providing our clients with the best possible service for commercial lease extension matters. We understand that every business has unique leasing challenges, and our goal is to help you find the best solution that aligns with your needs and financial situation.
Our team of dedicated lease extension solicitors possesses in-depth knowledge of property law and has extensive experience in handling various lease extension cases. We take a client-focused approach to make sure we understand your goals, and we work tirelessly to deliver tailored advice and personalised solutions.
The benefits of choosing Moeen & Co. Solicitors
- Top-quality advice from experienced commercial lease extension solicitors.
- A proactive approach to finding cost-effective solutions for your business.
- A client-focused service tailored to your unique needs.
- Clear communication and transparency throughout the lease extension process.
- Expert guidance and support throughout the lease extension process.
- Our commercial lease solicitors provide legal services on a fixed fee basis without blowing your budget and with no hidden costs.
- We are authorised and regulated by the Solicitors Regulation Authority (SRA), so you know you are in safe hands.
How much do solicitors charge for a lease extension using Section 42 Notice?
Our lease solicitors in London offer a fixed fee between £1,000 and £1,500 for legal services related to drafting the Section 42 Notice for lease extensions.
By choosing our fixed fee services, you can have the peace of mind that there will be no hidden costs or surprises. We believe in transparency and making the commercial lease extension process as smooth as possible.
Contact lease extension solicitor
If you are looking for a solicitor to extend your lease using Section 42 Notice, please call us today at 0203 959 7755 or email us at info@moeenco.com.
There are several ways to contact our solicitors based in Hayes, London:
- Phone - Call us on 0203 959 7755
- Email us - info@moeenco.com
- Online - Fill in our online enquiry form
- Visit our office - Room 1, The Winning Box, 27-37 Station Road, Hayes UB3 4DX
We are located near Hayes and Harlington Station on Hayes High Street, in Hayes Town Centre.
Legal Disclaimer
The information provided is for general informational purposes only and should not be taken as legal advice. While we make every effort to ensure accuracy, the law may change, and the information may not reflect the most current legal developments. No warranty is given regarding the accuracy or completeness of the information, and we do not accept liability in such cases. We recommend consulting with a qualified lawyer at Moeen & Co. Solicitors before making any decisions based on the information provided on this website.