How to Serve a Section 42 Notice to Extend Your Lease in England and Wales

Introduction

Extending the term of a residential lease is one of the most important steps a leaseholder can take to protect the long-term value of their property. In England and Wales, lease extensions are governed by the Leasehold Reform, Housing and Urban Development Act 1993 (“1993 Act”).

The statutory process under this Act gives qualifying leaseholders the right to extend their lease by serving a formal notice, known as a Section 42 Notice, on their landlord. Understanding how this process works, who is eligible, and what is required for a valid notice is essential to ensure a successful outcome.

Why Lease Extensions Are Important

A leasehold property is essentially a diminishing asset. As the years left on a lease decrease, so does the value of the property. A lease with a long unexpired term is far more attractive to potential buyers and mortgage lenders than one with fewer years remaining. When the lease term drops below eighty years, the cost of extending it rises considerably because of the introduction of “marriage value,” a calculation that increases the premium payable to the landlord. This often makes the difference between an affordable lease extension and a significantly more expensive one.

By using the statutory procedure, a leaseholder can secure a further ninety years added to their existing term and reduce the ground rent to a peppercorn, meaning no further rent is payable. This not only preserves and often enhances the value of the property but also ensures it remains mortgageable. For many, serving a Section 42 Notice is therefore not just a legal right but a practical necessity.

Eligibility to Serve a Section 42 Notice

Not every leaseholder can take advantage of the statutory right to extend. The 1993 Act contains several conditions that must be satisfied before a Section 42 Notice can be validly served. The property in question must be a flat rather than a house, as different legislation applies to houses. The lease itself must be a “long lease,” originally granted for a term exceeding twenty-one years. In addition, the leaseholder must have been the registered owner of the lease for at least two years. Ownership is determined by registration at HM Land Registry rather than by the date of completion of the purchase.

There are also some limited exclusions. For example, leases granted by the Crown, the National Trust or properties within cathedral precincts may be subject to different procedures. In most other cases, provided the flat and the leaseholder meet the statutory criteria, the right to serve a Section 42 Notice will exist.

Preparing for the Notice

Preparation is an essential stage in the lease extension process. A Section 42 Notice is a formal legal document and errors in its drafting or service can render it invalid. The process therefore should begin with the instruction of appropriate professional advisers. It is strongly recommended that a leaseholder instructs both a solicitor and a specialist surveyor to value the property.

The solicitor’s role is to advise on the legal framework, investigate the landlord’s title, draft and serve the notice, and ensure that statutory deadlines are strictly adhered to. The surveyor, usually a chartered surveyor experienced in leasehold enfranchisement valuation, provides the calculation of the premium that will be offered in the notice. The premium figure does not have to match the landlord’s expectation, but it must be made in good faith and supported by a professional valuation. Putting forward an artificially low figure may result in unnecessary disputes or challenges to the validity of the notice.

The surveyor will assess factors such as the current length of the lease, the amount of ground rent payable, the open market value of the flat, and, if the term has dropped below eighty years, the marriage value. These calculations are highly technical and require a specialist knowledge of relativity and deferment rates. Once this valuation is complete, the solicitor can proceed to draft the notice with confidence that the proposed premium is defensible.

Drafting the Section 42 Notice

The notice itself must contain certain prescribed information. At its core, it identifies the leaseholder, the lease, the property, and the landlord. It sets out the premium that the tenant is willing to pay, and it proposes the terms of the new lease, which will otherwise follow the statutory formula of an additional ninety years and a ground rent reduced to a peppercorn. The notice must also specify a date by which the landlord must serve a counter-notice. This date must give the landlord at least two months from the date of service.

Because accuracy is crucial, every detail in the notice must be checked meticulously. Errors in the date of the lease, the description of the property, or even the spelling of the landlord’s name can have serious consequences. A defective notice may be deemed invalid, which would not only delay the process but could also result in the leaseholder being liable for the landlord’s costs.

Serving the Notice

Once drafted, the notice must be served on the competent landlord. The competent landlord is the party who has a sufficient interest in the property to grant the lease extension, usually the freeholder but sometimes an intermediate landlord with a reversionary interest extending at least ninety years beyond the tenant’s term. Identifying the competent landlord is a technical exercise carried out by the solicitor through examination of the title at HM Land Registry.

The notice must then be served in accordance with statutory requirements, either by recorded delivery or by personal service. It is vital to retain proof of service, as disputes over whether a notice was properly served can arise. At the same time, the leaseholder must pay a statutory deposit to the landlord (if so demanded). This deposit is the greater of two hundred and fifty pounds or ten percent of the premium proposed in the notice. The deposit ensures the landlord’s reasonable costs are covered in the event the tenant does not proceed.

The Landlord’s Response

After receiving the notice, the landlord has twenty-one days to request evidence of the tenant’s title. This is typically provided by the solicitor through official copies of the leaseholder’s title from HM Land Registry. The landlord then has until the date specified in the notice to serve a counter-notice under Section 45 of the 1993 Act. The counter-notice will either admit the tenant’s right to a lease extension while proposing alternative terms, deny that the tenant has the right, or in rare cases claim a right to redevelop.

Most counter-notices admit the right to a lease extension but dispute the premium. Once served, the parties then enter into negotiations, usually through their respective legal representatives and surveyors. These negotiations can last several months, and often involve detailed consideration of valuation evidence.

Statutory Timetable and Tribunal Proceedings

The statutory timetable is strict and must be observed carefully. If the landlord fails to serve a counter-notice by the deadline, the tenant may apply to the court for a vesting order, compelling the grant of the new lease on the tenant’s terms. If the landlord does serve a counter-notice but the parties cannot agree on the premium or other terms, either party may apply to the First-tier Tribunal (Property Chamber) for determination. This application must be made within six months of the counter-notice; otherwise, the claim will be deemed withdrawn, and the tenant will not be able to serve a fresh notice for twelve months.

The Tribunal process provides an independent forum to resolve disputes, although it inevitably adds to costs and can extend the overall timescale. Nevertheless, it ensures that leaseholders cannot be held to ransom by landlords demanding unreasonable sums.

Common Pitfalls

There are several common pitfalls that leaseholders should be wary of. One of the most frequent mistakes is failing to include accurate details in the notice. Something as simple as an incorrect date of lease can undermine the validity of the notice. Another common error is serving the notice on the wrong landlord, particularly where there are multiple intermediate interests.

Timing can also cause problems. If negotiations break down and the Tribunal application is not made within the statutory window, the claim is lost. The tenant must then wait a year before starting the process again, during which time the lease will have shortened (in term) further.

A further issue arises where leaseholders attempt to draft and serve their own notices without professional help. While technically possible, the risks of making an error that invalidates the Notice are high. In almost all cases, the cost of instructing a solicitor and surveyor is justified by the security they provide.

Costs

Leaseholders should be aware that they are responsible not only for their own professional fees but also for the landlord’s reasonable costs. These costs include the landlord’s legal fees in connection with the notice and the landlord’s valuation fees. They do not, however, extend to the landlord’s costs in Tribunal proceedings. What is “reasonable” is open to debate, but landlords are not entitled to inflate their charges simply because the claim has been made.

Strategic Considerations

It is almost always advisable to serve a Section 42 Notice before the lease falls below eighty years, thereby avoiding marriage value. Where a leaseholder has owned their flat for at least two years and intends to sell, it can also be strategic to serve the notice and then assign the benefit of it to the purchaser. This allows the buyer to continue the lease extension process immediately, making the property more attractive on the open market.

Leaseholders may also be offered informal lease extensions by their landlord. While these can be quicker, they often come with terms that are less favourable, such as an increase in ground rent or the inclusion of other onerous provisions. The statutory route provides certainty and protection that informal agreements may sometimes not.

Additionally, it is still possible to engage in without prejudice correspondence with the Landlord whilst the Section 42 proceedings are ongoing to investigate if they would be willing to consider a longer lease than the statutory route would provide to, say, 999 years. The statutory route would only extend the lease by an additional 90 years above the existing term. “Without prejudice” means that the parties are able to propose and explore possible solutions to the dispute under consideration without having to worry that their discussions will in some way be regarded as an admission should the parties not reach an agreement.

Conclusion & How We Can Help

The law relating to lease extensions and Section 42 Notices is highly technical. The process involves strict statutory requirements, detailed valuation principles, and tricky deadlines. Even minor errors in the notice, incorrect identification of the landlord, or missed Tribunal timetables can result in your claim being invalid or delayed, often with significant financial consequences. At the same time, the sums involved in calculating premiums and negotiating terms can be substantial, particularly where the lease term has fallen below eighty years.

Our specialist property team has extensive experience advising leaseholders on lease extension matters. We can assess your eligibility, instruct and liaise with a trusted surveyor to obtain a robust valuation, prepare and serve a valid Section 42 Notice, and guide you through negotiations with the landlord. Where necessary, we are also able to represent clients in Tribunal proceedings to ensure that disputes are resolved fairly and efficiently.

In addition to responding to immediate lease extension needs, we also provide proactive advice for clients considering selling or purchasing leasehold flats, including guidance on assigning the benefit of an existing notice or identifying strategic points in time to serve one. Our aim is always to reduce risk, minimise costs, and achieve a smooth, successful outcome.

If you require support with a lease extension or serving a Section 42 Notice, we offer a no-cost, no-obligation 20-minute introductory call as a starting point. Alternatively, if you prefer more detailed initial guidance, we can provide a one-hour fixed-fee appointment (charged from £250 plus VAT to £350 plus VAT* depending on the complexity of the issues and the seniority of the fee earner).

Please email wewillhelp@jonathanlea.net providing us with any relevant details so we can make the call as productive as possible, or telephone us on 01444 708 640. Following this initial consultation, we will provide you with a tailored scope of work, a clear fee estimate (or fixed fee quote where possible), and confirmation of the next steps.

VAT is charged at 20%.

This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited.