Section 42 lease extension query

searchlight123

My step daughter is buying her first property, a flat in east London in a converted house. The flat has 86 years left on the lease and the price she's paying reflects the lease length we feel. The current owner is prepared to start the section 42 now to pass on to my SD to save her having to wait the 2 years of living there to start the process herself. A few questions please:

1. Is there a time limit to complete the section 42 once started, on my SD's side, as she may not have the funds to do this for around a year to 18 months?
2. I understand she will be liable for both her's and the freeholder's legal costs. Can anyone offer a ball park figure what these legal costs would normally be?
3. The freeholder has himself offered to extend the lease to either 99 years for £8,000 or 125 years for £10,000 but as i understand it a section 42 would add 90 years to the existing 86 years - so a total of 176 years, and as the online calculators suggest, at a figure of roughly £8-10k. So feel the section 42 is the better way to proceed?

There is no service charges at this property and ground rent is very low.

Many thanks for any info or advice you can give.

eddddy

tonygold said:

1. Is there a time limit to complete the section 42 once started, on my SD's side, as she may not have the funds to do this for around a year to 18 months?

Yes - there are strict time limits for every step of the process. It's quite complex.

In simple terms, the freeholder has a max 2 months to respond to the notice, and both parties will then have a max of 6 months to negotiate. Then your step-daughter would need to apply to a tribunal.

If she fails to apply to a tribunal in time, her application to extend the lease is withdrawn - and she'll probably have £3k to £4k in fees to pay.

Personally, I wouldn't start this process without having the funds in place.

tonygold said:

2. I understand she will be liable for both her's and the freeholder's legal costs. Can anyone offer a ball park figure what these legal costs would normally be?

Perhaps £3k to £4k - if it doesn't go to a tribunal hearing. (It's very unlikely to actually reach a tribunal hearing, because it's a relatively small sum involved.)

tonygold said:

3. The freeholder has himself offered to extend the lease to either 99 years for £8,000 or 125 years for £10,000 but as i understand it a section 42 would add 90 years to the existing 86 years - so a total of 176 years, and as the online calculators suggest, at a figure of roughly £8-10k. So feel the section 42 is the better way to proceed?

The fees would be lower if she could negotiate a deal with the freeholder. But as you say, the freeholder's initial offers aren't very good. It depends on how far they can be negotiated.

Also, you don't mention ground rent (and ground rent escalation) - that's very, very important. The section 42 route would reduce ground rent to zero. Is the freeholder offering the same?


Conveyancing solicitors often don't know much about lease extensions. Your step-daughter probably needs to speak to a specialist.

searchlight123

eddddy said:

tonygold said:

1. Is there a time limit to complete the section 42 once started, on my SD's side, as she may not have the funds to do this for around a year to 18 months?

Yes - there are strict time limits for every step of the process. It's quite complex.

In simple terms, the freeholder has a max 2 months to respond to the notice, and both parties will then have a max of 6 months to negotiate. Then your step-daughter would need to apply to a tribunal.

If she fails to apply to a tribunal in time, her application to extend the lease is withdrawn - and she'll probably have £3k to £4k in fees to pay.

Personally, I wouldn't start this process without having the funds in place.

tonygold said:

2. I understand she will be liable for both her's and the freeholder's legal costs. Can anyone offer a ball park figure what these legal costs would normally be?

Perhaps £3k to £4k - if it doesn't go to a tribunal hearing. (It's very unlikely to actually reach a tribunal hearing, because it's a relatively small sum involved.)

tonygold said:

3. The freeholder has himself offered to extend the lease to either 99 years for £8,000 or 125 years for £10,000 but as i understand it a section 42 would add 90 years to the existing 86 years - so a total of 176 years, and as the online calculators suggest, at a figure of roughly £8-10k. So feel the section 42 is the better way to proceed?

The fees would be lower if she could negotiate a deal with the freeholder. But as you say, the freeholder's initial offers aren't very good. It depends on how far they can be negotiated.

Also, you don't mention ground rent (and ground rent escalation) - that's very, very important. The section 42 route would reduce ground rent to zero. Is the freeholder offering the same?


Conveyancing solicitors often don't know much about lease extensions. Your step-daughter probably needs to speak to a specialist.

many thanks eddddy for your detailed response. much appreciated.