What is a Section 42 Notice to extend the lease?
(Last Updated: 30/11/2023)
07/07/2022
146
12 min read
Key Takeaways
- A Section 42 Notice (also known as the Tenant's Notice) is served on the landlord/freeholder and it starts the statutory lease extension process.
- Before starting the process, you should check your eligibility as you may not be eligible to formally extend your lease.
- Then you'll need to get a valuation and decide whether you can afford the premium before you serve the notice.
Leaseholders can serve their own section 42 notice, however, most people instruct a solicitor to do it for them. A leaseholder can extend the lease themselves or they can assign the section 42 notice to a buyer, to allow them to extend the lease after the property has been sold.
How do you respond to a section 42 notice?
You have two months to respond with a counter notice, or you may be legally obliged to comply with the tenant's terms. In your counter notice, you may:- accept the lease extension request and consent to the tenant’s terms
- accept the lease extension request but with the condition that the tenant agrees to alternative terms
- reject the request if you intend to redevelop the flat
- reject the request on the grounds of either ineligibility (based on the statutory requirements of a lease extension) or faults found in the Section 42 notice.
Our specialist leasehold solicitors can advise on the validity of your leaseholder's extension request and help you negotiate fair terms.
What is Section 42 of the Landlord and Tenant Act 1987?
The content of the s.42 notice is actually set out within the Leasehold Reform Act. This states the tenant's notice must:
- 1
state the full name of the tenant and the address of the flat in respect of which he claims a new lease under this Chapter;
2contain the following particulars, namely;
- sufficient particulars of that flat to identify the property to which the claim extends,
- such particulars of the tenant’s lease as are sufficient to identify it, including the date on which the lease was entered into, the term for which it was granted and the date of the commencement of the term,
- 3
specify the premium which the tenant proposes to pay in respect of the grant of a new lease under this Chapter and, where any other amount will be payable by him in accordance with any provision of Schedule 13, the amount which he proposes to pay in accordance with that provision;
4specify the terms which the tenant proposes should be contained in any such lease;
5state the name of the person (if any) appointed by the tenant to act for him in connection with his claim, and an address in England and Wales at which notices may be given to any such person under this Chapter; and
6specify the date by which the landlord must respond to the notice by serving a section 45 counter notice. The date specified in the tenant’s notice must be a date falling not less than two months after the date of the giving of the notice. It is most common to serve the date 2 months and 1 day in the future.
How to complete section 42
Serving a Section 42 Notice correctly is critical. A conveyancing solicitor experienced in lease extensions is fully aware that an S 42 Notice served on a landlord/freeholder must be complete and with no inaccuracies.
If your landlord finds faults in the notice, they can apply to court to have it dismissed, which means not only that your application is stopped but also that you cannot make another application for 12 months.
The Tenant's Notice is a clear milestone in the lease extension process also because all matters of valuation and compensation etc., are calculated from the date it is served.
In the article below, we run through what the process is to serve the notice and answer frequently asked questions.
Free initial leasehold advice
Arrange a free consultation with one of our experienced conveyancing executives on:
- Lease extension.
- Purchasing the leasehold, freehold or share of freehold.
- Selling a leasehold property with a short lease.
- Extending the lease at the same time as you sell.
We specialise in lease extensions and have RICS valuers for the premium/negotiation and solicitors for the section 42 notice and formal or informal extension. Request a tailored quote for:
- RICS Lease Extension Valuation or L2 Homebuyers Survey.
- Serving of the section 42 notice or section 13 notice on the freeholder.
- Negotiation with the freeholder (with the support of your RICS valuer).
- Completion of the legal work, including deed of variation.
- Application to Tribunal to determine the premium.
- Vesting order for absent landlords.
What is the section 42 process?
- 1
Get a premium valuation - unless you have agreed with your freeholder a premium to extend under the statutory route that you are happy with, then you'll need to get a RICS valuer to provide a premium for what the additional 90 years should cost.
- 2
Check you can afford the premium - lease extension premiums can be costly, so make sure you can afford the premium plus the other lease extension costs. A lease extension can be paid for from:
- the sale of the property;
- the remortgage of the property; or
- personal savings.
- 3
Instruct your solicitor - choose a lease extension specialist who will:
- obtain your proof of ID, proof of address and (if applicable) proof of funds to pay for the premium
- obtain a copy of your lease
- check your eligibility to formally extend your lease
- obtain the competent freeholder's home address - we explain what to do if you cannot locate your freeholder*
- get in contact with your freeholder to confirm your intention to extend your lease using the formal process and request the freeholder's solicitor's details
- draft the section 42 notice and send to you for signing - do not date the notice. It requires someone to witness your signature and needs to be sent back to your solicitor in hard copy with a 'wet ink' signature
- serve the notice on the freeholder at their home address or last known address - the solicitor should serve the tenant notice using special delivery or, at your cost, courier so that the freeholder signs and acknowledges receipt of the notice
- (if required) reply to the freeholder with evidence of your eligibility
- receive counter-notice from the freeholder and either progress on with the lease extension or refer the counter offer to your surveyor for their comment
- register the notice at the Land Registry
- you will need to pay to your solicitor the freeholder's solicitor's fees confirmed within the section 45 notice and these will be held on account until completion.
* Your solicitor will charge a separate fee for obtaining a vesting order.
The final stage after getting the counter offer from the freeholder agreeing to the premium is for the solicitor to review the new lease, handle completion and register the extended lease. Click here to see what happens at this final stage of extending a leasehold in more detail.
Download your FREE Lease Extension Process Guide
In one simple A4 page guide - read the complete lease extension process.
How much does it cost to extend a leasehold in 2023?
There are several costs involved in extending a leasehold, including:
- Premium - This is often the most expensive part of extending and typically costs £5,000-£10,000
- Lease extension valuation - Use a property-accredited independent surveyor to limit the chances of your freeholder disputing the valuation and requesting a second opinion. Our panel are RICS accredited and we offer lease extension valuation for £600 INC VAT
- Lease extension solicitor - Compare several quotes and make sure the fee is fixed and includes all the necessary work. Our fixed fee is £720 INC VAT, we can also help with the section 42 notice only for £600 INC VAT
- Freeholder's valuation - This is only payable if they don't accept your valuation and request a second opinion. They choose their own surveyor, so this cost can vary but should be from £600 to £900
- Freeholder's legal costs - This is their solicitor's fees, they choose their own solicitor and this cost should be in the region of £600 - £1,200. We offer this service for £900 INC VAT
- Surveyors negotiation costs - Again, this is only payable if they dispute your valuation and their surveyor values the property at a higher price. Most surveyors charge £150 to £200 per hour for negotiation.
- Land Registry Fees - £20-£40
- SDLT - Most lease extensions won't fall within the bracket for SDLT because the premium paid to the freeholder will fall below the SDLT bracket. If, however, you're paying more than the SDLT bracket, currently £250,000, or extending the lease for more than £40,000 on a second home, you'll probably have to pay SDLT. This will be payable on the grant of the new lease and within 14 days of completion. Cost Varies
As you can see, the total cost to extend a leasehold varies depending on your property, but will usually fall in the range of £7240 to upwards of £13,000, plus any SDLT due. You can check your stamp duty liability with our Stamp Duty Calculator.
Frequently Asked Questions
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Written by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Reviewed by:
Caragh Bailey
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
