My lease is about to expire – help!

25 / 10 / 2016

In this article which first appeared in the News on the Block Magazine on 14 October 2016, Jonathan Achampong explains what happens on the expiry of a long residential lease.

It is a well-known fact that a lease is a capital asset that has a market value but it is also a wasting asset in that its value will gradually erode as time passes. The fewer years there are left to run on the lease, the less it will be worth.

However, there is a common misconception that when a long residential flat lease expires, the tenant must automatically vacate the property. This is not strictly true.

When the contractual term of a residential long lease at a low rent comes to an end, then providing the tenant occupies the flat as his only or principal home, the lease is continued under Schedule 10 of the Local Government and Housing Act 1989 (this effectively replaces Part I of the Landlord and Tenant Act 1954 which had a similar effect) until brought to an end in accordance with this Act.

As one would expect, strict requirements must be met to be eligible for security at the end of the lease and certain properties are automatically excluded from the protective framework altogether – for example, where the landlord is the Crown.

Nonetheless, the general position is that, unless either the tenant or the landlord takes specific steps to end the tenancy, it will simply continue on precisely the same terms and the tenant does need to do anything unless he or she receives a notice from the landlord.

Depending on the circumstances, a tenant may be able to remain in occupation on the same terms, or the landlord may propose a new assured periodic tenancy. Where the landlord wishes to end the tenancy by replacing it with an assured periodic tenancy, new terms will need to be settled by agreement between the parties or fixed by a Rent Assessment Committee.

It goes without saying that tenants ought to extend their lease, whether by informal negotiation with the landlord or by making a statutory claim, as soon as possible.

Lease extension and enfranchisement rights can still be exercised after the term of the lease has expired, but there are strict time limits for doing so. Landlords wishing to either regain possession of flats, or to continue to let them on the best terms possible, should instruct a good solicitor promptly to ensure that the correct steps are taken in a timely fashion.