The Covid-19 pandemic is causing sweeping transformation to all aspects of the property market from conveyancing and residential tenancies, through to commercial leases and property acquisitions for both landlords and tenants.
One aspect which has remained stationary is that residential lease terms will continue to reduce and leases will continue to be depreciating assets. Tenants of long leases need to be mindful of their lease terms and start the process to extend their leases before the term drops below 80 years. Be aware that lease extension premiums are more costly where a lease term has an unexpired term of less than 80 years remaining. Tenants therefore must ensure that they obtain specialist valuation and legal advice well in advance of this cut-off point.
Tenants should approach their landlord in the first instance to ascertain whether it is prepared to grant a voluntary lease extension and, if so, upon what basis. If not, a qualifying tenant will have the right to acquire a statutory lease extension pursuant to the Leasehold Reform Housing and Urban Development Act 1993. Please see our information sheet.
Given the current climate it is worth ascertaining whether the Landlord would be prepared to accept service of the S42 Initial Notice of Claim from your representative by email.
Landlords will also need to be mindful of the deadline, of not less than two months, to respond to the tenant's Initial Notice of Claim by way of a S45 Counter Notice. Given that the Act provides for an Initial Notice to be served at a landlord's last registered address, the Initial Notice is deemed to have been received if sent by first-class post. A landlord must therefore ensure that any tenant is aware of any change of registered address given the current circumstances. Again, a landlord must seek legal and valuation advice well in advance of the deadline for service of the Counter Notice.
Applications to the First Tier Tribunal (Property Chamber) in view of the Covid 19 Pandemic
The statutory time frame prescribed by the Leasehold Reform Housing and Urban Development Act 1993 for extension leases, gives a strict deadline of six months from receipt of the Landlord's S45 Counter Notice to make a protective application to the First Tier Tribunal (Property Chamber). If the terms of the acquisition of the new extension lease and/ or premium have not been agreed by the parties within this timescale, and no protective application is made, the tenant's claim for a statutory lease extension is deemed withdrawn and the tenant will not be able to apply for a further 12 months from the date of the deadline.
Protective Applications to the Tribunal have historically been made in the standard paper format, which presents obvious difficulties to tenants given the current circumstances.
Accordingly the First Tier Tribunal (Property Chamber) has confirmed that all new applications and appeals should be lodged with the Tribunal by email and that the application fee can be paid within 28 days. Payment will still need to be made by cheque or postal order, however.
This change will be appreciated by enfranchisement lawyers and, in addition, potentially opens the door for further changes to be made during this period. It would be greatly beneficial for time frames for all applications to include counter notices to be extended temporarily for the duration of the pandemic. Furthermore it raises a question as to the possibility of modernising the statutory procedure so as to enable Initial Notices of Claim and Counter Notices to be served by email, which is particularly pertinent in the current climate. These proposals have currently been put forward to the Government by the Association of Leasehold Enfranchisement Practitioners (ALEP).
The new guidance issued by the First Tier Tribunal (Property Chamber) can be found on the Judiciary's website.
Given the fast pace of amendments to statutory procedures at present, this is a snapshot of the current position and subject to change.