Section 42 Lease Extension

A Section 42 lease extension lets certain commercial leaseholders extend their leases. This lease extension adds 90 years to the current lease term.

If you're a commercial tenant or landlord in the UK, knowing about Section 42 is key. This part of the Leasehold Reform, Housing and Urban Development Act 1993 lets leaseholders extend their leases.

Need help drafting a Section 42 notice to extend your commercial lease? Contact our expert commercial lease solicitors in London at 0203 417 3700.

Table of Contents

What is a Section 42 lease extension?

A Section 42 Notice is a formal statutory lease extension request made by a leaseholder to the freeholder, landlord, or other relevant parties.

This extension adds 90 years to the current lease term. It also reduces the ground rent to zero.

This structured and legally protected process for negotiating lease extensions with landlords mainly covers residential leases but can also apply to some commercial leases.

Key Takeaway

A Section 42 lease extension protects tenants from huge rent increases and lease termination. It guarantees an extension under legal terms.

Who is eligible for a Section 42 lease extension?

Not all leaseholders can get a statutory lease extension. Here are the basic rules:

1. The lease must have at least 21 years left.
2. The leaseholder must have owned the lease for at least two years.

Speak to our commercial lease solicitors at 0203 417 3700 to find out if you're eligible. We can also see if Section 42 is the best option for extending your lease.

What are the benefits of a Section 42 lease extension?

• Provides a more stable business foundation.
• Fixed terms can help prevent sudden rent increases.
• Protects against unexpected terminations.
• A longer lease can increase the property's value if you have a stake.
• An extended lease can enhance the property’s resale value.
• An extended lease can enhance the property’s sublease value for the tenant.
• Strengthens the landlord-tenant relationship for the long term.

Section 42 lease extension process (step-by-step)

The Section 42 lease extension process has several steps. Here's what happens:

1. Serving the Section 42 Notice
2. Landlord’s Response (Counter-Notice)
3. Negotiation of Terms
4. Formalisation of Lease Extension

Serving the Section 42 Notice

The tenant starts by sending a formal notice (called a Section 42 Notice) to the landlord. This notice asks for an extension, suggests a lease term, and estimates the premium payment.

Landlord’s Response (Counter-Notice)

After getting the Section 42 Notice, the landlord has two months to respond with a Counter-Notice. They can accept or suggest different terms.

Negotiation of Terms

If the landlord doesn't agree with the initial terms, the two sides negotiate. They aim to agree on the extension period and premium. Experienced commercial lease solicitors are key in securing fair terms here.

Formalisation of Lease Extension

Once an agreement is made, the new lease terms are set. If no deal is reached, the case goes to the Leasehold Valuation Tribunal. They decide on the terms then.

What happens if the landlord doesn’t respond to the Section 42 Notice?

If the landlord fails to respond within the specified timeframe (usually two months), they effectively lose their right to negotiate the terms. The leaseholder can then proceed on their proposed terms, subject to certain legal protections.

What costs are involved in a Section 42 lease extension?

Common costs involved in a Section 42 lease extension include:

• Premium Payment: Paid to the landlord for the lease extension.
• Legal Fees: For drafting documents and ensuring compliance with Section 42.
• Surveyor Fees: For premium assessment and valuation.
• Landlord’s Reasonable Fees: Tenants may be required to cover the landlord’s legal and valuation fees, as long as they are reasonable.
• Tribunal Costs: If disputes go to a tribunal, there may be additional costs.

How long does a Section 42 lease extension take?

On average, the Section 42 lease extension process can take 3-12 months to finalise the extension, especially if disputes need tribunal intervention.

The process can take several months, depending on the complexity of negotiations and both parties' responsiveness.

What makes a Section 42 notice invalid?

To exercise the right to extend a lease, a tenant must serve a Section 42 notice on the landlord. The Leasehold Reform, Housing and Urban Development Act 1993 requires this notice to include specific essential information:

• Names of all relevant parties
• Details sufficient to identify the property
• Details sufficient to identify the lease
• The premium the tenant offers to pay the landlord
• The proposed terms for inclusion in the lease
• The deadline for the landlord’s response

Not including all needed details or giving too little information can make a notice invalid. If a notice is seen as invalid, and the landlord doesn't agree to ignore the issue, it's considered defective. This means the notice won't start the lease extension process, and the tenant can't serve another notice for 12 months.

This delay not only wastes the initial costs but also lowers the lease's value over that year. This could lead to a higher premium for the tenant.

In some cases, a defective notice can be fixed by going to the County Court. But it's best to make sure the notice is right from the start.

How to ensure your Section 42 notice is valid?

To make sure your Section 42 notice is valid, consider the following:

• Hire a solicitor to ensure the notice is accurately drafted and legally compliant.
• Engage a chartered surveyor to estimate a fair premium and strengthen the notice.
• Double-check lease details and property information to prevent errors.
• Serve the notice correctly and promptly to ensure legal validity and avoid disputes.

Writing and serving a Section 42 Notice correctly protects your right to extend the lease. It also makes the negotiation process smoother.

Is a solicitor required for a Section 42 lease extension?

While not legally required, hiring a solicitor is highly recommended. Our commercial lease solicitors can help draft documents, negotiate terms, and accurately assess premium values, which can simplify the process and avoid costly mistakes.

How can a lease solicitor assist with a Section 42 lease extension?

A lease solicitor is very helpful in the Section 42 lease extension process. We offer several key supports:

1. Drafting the Section 42 Notice: We make sure the notice is right, with all the legal details. This reduces the chance of it being thrown out.
2. Confirming Eligibility: We check if you qualify for a lease extension. We also tell you the best way to handle your situation.
3. Negotiating Terms: Our solicitors deal with the landlord on the premium and other terms. We aim for a fair agreement.
4. Guiding Through Legal Procedures: If there are disputes or if the case goes to a tribunal, they represent you. We guide you through the legal steps.
5. Saving Time and Cost: We handle the legal stuff and avoid mistakes. This saves you time and money, avoiding delays or needing to start over.

Get professional assistance with your Section 42 lease extension notice. Call our London-based commercial lease solicitors at 0203 417 3700.

How much do solicitors charge to extend a lease using a Section 42 notice?

At Wembley Solicitors, we offer affordable commercial lease extension and Section 42 notice drafting services on a fixed-fee basis, with no hidden costs.

Our commercial lease solicitors in London charge a fixed fee ranging from £1,000 to £1,500 (plus VAT) to extend a lease by way of a section 42 notice.

Contact Wembley Solicitors

For expert help with drafting a Section 42 notice to extend your lease, contact our commercial lease solicitors in London at 0203 417 3700.

FAQs about Section 42 lease extension