Leasehold extension and the Building Safety Act 2022

Leasehold_issue

Hi. Back in May, I started a lease extension process offered by the landlord of my flat (a big name housing association). I paid for the valuation and they made me an offer of a premium which I accepted. However, since then, no progress has been made due to what seems to be ignorance about the implications of the Building Safety Act 2022 and the government guidance on lease extensions.

Due to a loophole in the Act, by extending the lease, I would lose the current protections I have in respect of liability for the remedy of safety defects. The landlord has confirmed that I am a 'qualifying leaseholder' under this Act but seems unaware that government guidance is that an agreement should be reached to extend these protections (pending Parliament rectifying the loophole). After 3 months of non-response, despite multiple contacts from my solicitor, the housing association has now announced that it is nothing to do with them as there is a 'superior landlord' who I must deal with. The 'superior landlord' has been contacted by my solicitor but is similarly refusing to respond to the request. 

I feel completely stuck and cannot see how I'm ever going to get the lease extension done. Has anyone else come up against this issue? Can anyone offer any advice? I have spoken to the Leasehold Advisory Service, but they just told me what I already knew and said that the legislation needs to be changed. Not much help!

Jonboy_1984

We had an uncooperative landlord and had to go down the formal section 42 route rather than an informal extension. 

One the formal route you start by issuing a section 42 proposal, and they have a specific timeframe to counter and for negotiation. Each period has specific deadlines and it is vital they are met, so make sure your solicitors are genuinely experienced in lease extensions rather than conveyancing experts (This might well be a ALEP member).

Might be worth asking neighbours if they are trying to do anything similar, we ended up doing it jointly with 5 neighbours (having found three others had hit the same wall and 2 that where planning to do it) and saved a big chunk of fees as the surveyor negotiated em-mass and our solicitor did most of his work in bulk. Our legal fees were around 30% less than my brother who had to go it alone.

Make sure you are financially ready for a few £k over the initial estimates as it can be a rocky journey.

Also be aware an informal extension needs mortgage company agreement as it will often change lease terms, a formal one is normally just notified to them as it extends by 90 years on same terms and reduces ground rent to peppercorn.

eddddy

Jonboy_1984 said:

We had an uncooperative landlord and had to go down the formal section 42 route rather than an informal extension. 

One the formal route you start by issuing a section 42 proposal, and they have a specific timeframe to counter and for negotiation. 

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I think you might have misunderstood the OP's problem.

The problem is that the government left a loophole in the Building Safety Act 2022.  As it stands, if the OP extends their lease - using the statutory route or informal route - the OP will lose the statutory protection given by section 8 of the Building Safety Act.

The government have been made aware  of the loophole, and they plan to introduce new legislation to fix the loophole - but there isn't a timescale for doing that yet.

In the meantime, the government have asked freeholders to 'voluntarily' add some new terms to leases when they grant lease extensions. But they cannot force the freeholders to do that.


And it seems that some leaseholders have already extended their leases, before anyone spotted the loophole, so they are currently in a tricky position. But hopefully the government will make the new legislation retrospective.