A statutory lease extension is usually put into place by a document sometimes referred to as a “Deed of Variation”, which sits alongside your lease at the Land Registry.
This document extends your lease by 90 years and reduces your ground rent to £0. Otherwise, it should say that your lease stays broadly the same.
One of the major benefits of a statutory lease extension is that it dramatically reduces the opportunity for your freeholder to make unwanted changes to your lease. This is a key difference from an informal lease extension, where a freeholder can make any changes they wish – and these changes are rarely beneficial to you!
There are a number of changes that can be added to the Deed of Variation, and the main examples are below:
Statutory Lease Extension Clause
This is a clause that states the lease extension is a statutory lease extension. This is a useful clause, because it means you don’t need to tell your mortgage lender that you’ve done a lease extension.
Redevelopment Rights Clause
This is a clause that gives your freeholder the right in the last year of your current term to apply to the court to make a compulsory purchase of your flat because they want to redevelop it.
This is similar to the statutory right which the government, councils or utility companies sometimes have to compulsory purchase property.
In many cases redevelopment won’t happen. If you are still in your flat in 50+ years, while this might not be very welcome, the court will insist your freeholder has to pay a fair price for your property.
Resolve defects
If your lease contains a genuine defect, there might be an opportunity for you or your freeholder to have this rectified.
In order for something to be a genuine defect, it has to be considered one from both the standpoint of the freeholder and that of the leaseholder. It can’t simply be desirable to one or the other.
An example of where an issue was considered a genuine defect is where the % contribution each flat made to the service charge bill for a building did not add up to 100%.
An example of something which wasn't considered a defect was where the leaseholder only had access on foot to their garage but wanted it extended so they could access the garage with the car. The freeholder argued this wasn't a defect from their standpoint. Their argument was the drive was sufficiently narrow that if the leaseholder parked in front of the garage, it would have restricted other access rights.
If you have a known defect in your lease, please let us know when you instruct us to do your lease extension.
Accommodate "Changes"
Where there has been a "change" since the flat was originally leased and where it would also be "unreasonable" not to alter the lease, an alteration might be allowable.
The types of “changes” which are considered relevant are things like changes to legislation, or inflation, which means the value of money goes down over time. A simple change in your freeholder’s opinion won’t cut it!
Acceptable examples include:
Notice Fee: Often leases require the leaseholder to give the freeholder "Notice" when they sell, mortgage or transfer the property. Often the freeholder charges a "Notice Fee" for updating their records.
Freeholders frequently increase in this fee when the lease is extended and this is acceptable, so long as the fee is not increased substantially more than inflation since the flat was originally leased. Sometimes a freeholder will replace a £ figure with the words "a reasonable fee", and the First Tier Tribunal has previously ruled that this is not allowable.
In the landmark tribunal case, it was considered that if a change requires an entirely new provision in the Deed of Variation – rather than an alteration to an existing clause – then it is not allowable.
Unacceptable examples include:
We have either directly been involve
No Hard Flooring: The freeholder wanted to introduce a brand new clause into the lease requiring the floors to be covered with carpet and prevent them being replaced with wooden or laminate flooring. They wanted to reduce noise transmission between flats and argued this was not unreasonable to include - but this justification isn't enough to include it in the lease.
Cost to approve alterations: The freeholder wanted to add new clauses which would require the leaseholder to apply to make changes to their flat which were not restricted under their current lease - such as replacing their boiler and fuse box. Again, this wasn't allowable.
No Airbnb-style letting: Where the freehold was owned by a consortium of other leaseholders, they wanted to introduce a restriction on letting the flats for short periods (i.e. on sites like Airbnb). There was no such restriction in the currently lease, so the clause could not be added.
Changes by agreement
Where the freeholder and the leaseholder both want a change (or one doesn’t object) then it can be added to the lease.
Occasionally a change will be proposed by the freeholder which genuinely benefits the management of the block and your lease extension solicitor consider these acceptable.
Other Amendments
The article above includes the main categories of changes which can be made under the Leasehold Reform Housing and Urban Development Act 1993, but there are a few more which might affect you.
In conclusion...
There is limited scope for making changes to your lease.
If you use us to do your lease extension, if your freeholder proposes any changes that are not allowable under the legislation, your solicitor will discuss these with you before they accept them. In extreme circumstances it can be possible to make an application to tribunal to have them determine what can or can't be included, but it rarely gets to this point.
If you do want a change made to your lease, please speak to us before we get started and we can see if this is possible.
