Section 42 Notice

What and Why?

Foundation Surveyors have many years’ experience in leasehold matters including providing lease valuations and assisting with lease extensions. Whether you’re a tenant/leaseholder wishing to apply for a leasehold extension, a landlord/freeholder looking for help with a formal or informal counter-offer, or a group of leaseholders needing advice with collective enfranchisement, our team of surveyors can guide you through all the steps.

Initial Notice

Also known as the Initial Notice, the Section 42 Notice is a critical element of the lease extension process. Once a valuation figure has been established, your solicitor will serve Notice on the freeholder or his management company.

The Initial Notice will include the amount you are offering to pay for the extension – use this Lease Extension Calculator to help you estimate the premium – as well as the rights to which you are entitled to according to The Leasehold Reform, Housing and Urban Development Act 1993. Critically, this includes a 90-year extension period and the reduction of the ground rent to a ‘peppercorn rent’, meaning no ground rent at all.

When processing the lease extension, the date used is that of the property valuation. That way, regardless of how long the lease extension process may take, the value is neither influenced by house price variations nor by the passage of time.

It is worth pointing out that serving a Section 42 Notice should by no means be considered a ‘hostile’ act towards the freeholder. Rather, in many cases, it is a necessary formal process in order to get the freeholder to respond meaningfully to a leasehold extension request.

Counter Notice

The Section 45 Notice, or Counter Notice, is the freeholder’s response to the Section 42 Notice. Serving the Initial Notice triggers the Act and its strict timetable of actions that must be followed. Upon receipt of the Notice, the freeholder has 2 months to serve the Counter Notice to the leaseholder.

He can accept the Section 42 Notice and all its terms, in which case no Section 45 Notice is required. This is rare but not unheard of. The freeholder can also completely reject the tenant’s claim if he believes that the leaseholder is not eligible for a statutory lease extension.

In most cases, a Counter Notice is served, with a revised higher premium that will start a negotiation process between the two parties’ surveyors until a mutually agreed premium is found. The matter then proceeds to completion, provided that all terms of the lease are also agreed upon.

Serving the Section 45 Notice starts a formal timetable including the 6-month limit for a tribunal application and the certainty that, if all else fails, a resolution to the procedure will be found at tribunal.

At Foundation Surveyors, we have an experienced team of Chartered Surveyors with extensive experience in the Leasehold Reform Act at your disposal. For information regarding leasehold anywhere in London, please call our office on 020 8133 9517 and speak to a specialist, or contact us in writing today.

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