This note discusses the eligibility criteria for claiming a new (or extended) lease of a residential flat under the Leasehold Reform Housing and Urban Development Act 1993.
Under the Leasehold Reform Housing and Urban Development Act 1993, a tenant of a flat with a long lease is entitled to claim a new lease to replace their existing lease. This is commonly referred to as a lease extension.
There is no limit to the number of times a tenant may exercise its right to a new lease.
NOTE: The Leasehold and Freehold Reform Act 2024 (LFRA 2024) received Royal Assent on 24 May 2024, which substantively amends the law relating to enfranchisement and lease extensions under both the Leasehold Reform Act 1967 and Leasehold Reform Housing and Urban Development Act 1993 and will be brought into force by regulations in due course. This note does not reflect any of those proposed changes, and so full advice should be sought before embarking on any lease extension.
What should the tenant do before the claim is started?
Before the tenant serves its notice of claim under section 42 requesting a new lease, it is important to establish the following:
- Whether the tenant is eligible to bring a claim for a lease extension.
- The correct landlord on whom to serve the notice of claim and the owners of any intermediate interests between the tenant and that landlord.
- How much the new lease is likely to cost.
- Whether the tenant is entitled to seek any amendments to the terms of the existing lease.
Qualifying criteria for a lease extension
To bring a claim for a new lease, all of the following criteria must be satisfied:
- The tenant must hold the property under a long lease.
- The property must be a flat in a qualifying building.
- There must be no undertenant who has a right to a new lease.
- The tenant must have been a qualifying tenant of the flat for at least two years as of the date on which the claim is made.
A flat is defined as "a separate set of premises (whether or not on the same floor) – which forms part of a building, and which is constructed or adapted for use for the purposes of a dwelling, and either the whole or a material part of which lies above or below some other part of the building."
In the context of a claim for a new lease, the definition of "flat" is extended to include appurtenant property, which includes "any garage, outhouse, garden, yard and appurtenances belonging to, or usually enjoyed with, the flat and let to the tenant with the flat on the relevant date…"
Long lease
The most common category of long lease is a lease that was originally granted for a term of more than 21 years. Various other types of lease will also qualify as a long lease such as;
- A lease granted under the right to buy provisions in the Housing Act 1985 or the right to acquire provisions in the Housing Act 1996.
- A shared ownership lease where the tenant's share is 100% (although case law suggests that any shared ownership lease granted for a term of over 21 years will qualify).
The following leases will not qualify as a long lease:
- A business lease under Part II of the Landlord and Tenant Act 1954.
- A lease granted by a charitable housing trust for the purposes of its charitable functions.
- A sublease that was unlawfully granted out of a lease that was not a long lease and the breach has not been waived by the superior landlord.
Only one qualifying tenant per flat
There can be only one qualifying tenant of a flat at any time. Where there is more than one potentially qualifying leasehold interest, the tenant under the most inferior lease has the right to bring a lease extension claim.
Where a headlessee has a long lease comprising one or more flats, it is entitled to claim a new lease of each flat comprised within its headlease which has not been sublet to a qualifying tenant.
Unlike in collective enfranchisement claims, Tenants of flats (who otherwise qualify) have the right to a new lease of each flat they own, no matter how many flats they own in the building.
Two-year ownership requirement
To claim a new lease, the tenant must have been a qualifying tenant of the flat for at least two years. The period of ownership is measured backwards from the date of service of the notice of claim. It is generally considered that to satisfy this requirement, the tenant must have been the legal owner (that is, registered proprietor) of the lease for at least two years, and the required two-year period of ownership begins to run from the date the tenant is registered as the proprietor of the lease at the Land Registry, not the date of purchase.
If a lease is vested in joint tenants, and subsequently, it becomes vested in one of those tenants alone (either by survivorship or following a transfer), it is not clear whether that tenant can count the period of joint ownership as part of its two-year ownership, for the purposes of bringing a claim for a new lease.
As all joint tenants are equally entitled to the whole property, it would seem logical for this to be possible. However, the interpretation provision in the Leasehold Reform Housing and Urban Development Act 1993 is ambiguous. Unfortunately, there has not yet been any case authority on the point.
The personal representatives of a tenant who satisfied the two-year ownership requirement at the date of death are entitled to exercise the right to a new lease on behalf of the estate as long as the claim is made within two years from the grant of probate or letters of administration.
A trustee in bankruptcy cannot rely on the bankrupt person's period of ownership in order to bring a claim for a new lease. This is because the bankrupt's estate vests in the trustee in bankruptcy automatically when the trustee's appointment takes effect, without the need for any formal transfer or registration. However, the trustee in bankruptcy will be able to acquire the necessary two-year period of ownership without having itself been registered as proprietor of the lease.
Excluded buildings
Generally, the tenant of any flat in any building may bring a claim for a new lease, subject to satisfying the qualifying criteria. However, tenants of flats in the following types of buildings are excluded from the right to a new lease:
- Buildings where the Crown is the competent landlord.
- Buildings in which an interest is owned by the National Trust as part of its inalienable estate.
- Buildings within a cathedral precinct.
