My name's Jodie Cuff and I work in our 'sunny' Weymouth office, by the seaside. Lease extensions are a topic we answer many queries on in our Customer handling teams. They are also one of the applications we raise the most requisitions on, so I've written a blog to try and help you avoid the most frequently encountered issues.
Lodgement via e-DRS
It's really important when you're submitting an application via e-DRS to submit it correctly. Using the option for 'lease extension' will make sure that applications are correctly captured against all the necessary title numbers and your priority is protected. Take a look at our online guidance, which covers how to lodge an application for a lease extension via e-DRS.
The fees on lease extensions can seem a bit confusing. I've separated out the most common types of application to help explain how the fees are assessed.
The fee is payable under Scale 1 on the sum of the premium in the lease/deed added to any rent. A minimum £40 fee is payable if there is no premium and no rent.
The lease extension does not qualify for the reduced fee for e-lodgement.
Lease extension plus transfer
If you are lodging a lease extension along with a transfer the fees will depend on the order of the transactions and how you apply:
Transfer followed by the lease extension
A separate fee will be required for the transfer and our Fee Calculator can help you assess the correct fee based on the circumstances.
The transfer does qualify for the reduced fee for e-lodgement.
Lease extension followed by the transfer
- The applicant is the transferee - If you lodge both parts together then only one fee is payable, namely the fee for the lease extension
- The applicant is the transferor - If you lodge both parts together then two fees are payable. One for the lease extension and the other for the transfer which will be reduced if you lodge your application electronically – our Fee Calculator can help you calculate the correct fee based on the circumstances.
As the fees are payable by Variable Direct Debit if you quote the wrong fee we cannot debit the correct fee without first obtaining your authority. This means we will often ring you or have to raise a requisition, which then slows down the progress of your application and the registration process in general.
We reject quite a few applications because they don't contain the prescribed clauses so it's important they are incorporated wherever they should apply. If the lease extension is by way of a new lease or if it is a Deed of Variation which contains an expressed surrender or the demise of a new term it must contain the prescribed clauses.
Encumbrances against the existing tenant's title
As a lease extension acts as a surrender and regrant any encumbrances against the existing leasehold title will need to be dealt with. If you don't send us these with your application we will send you a requisition and your application will face delays.
You will need to lodge a discharge or deed of substituted security for any registered charge. If a deed of substituted security has an MD reference then we will enter any matters contained within the charge otherwise it will need to be accompanied by an RX1 to enter any restriction and/or CH2 to enter any obligation for further advances.
Any restrictions must be either cancelled (RX3) or withdrawn (RX4). If you require an equivalent restriction on the new leasehold title then you must apply for it in clause LR13 of the prescribed clauses or use a form RX1. Only restrictions in standard form can be applied for in clause LR13. See Practice Guide 19 for the wording of standard form restrictions.
Encumbrances against the landlord's title
As with the registration of any new lease, failure to deal with any encumbrances on the landlord's title may delay the progress of your application. You will often need to supply the consent/certificate for any restrictions that effect on the landlords' title.
If there is a charge without a restriction in the register we can complete your application without their consent but we will make the following note on the leasehold register:
“The title to the lease is, during the subsistence of the charge dated …… in favour of ……. affecting the landlord's title (and, to the extent permitted by law, any charge replacing or varying this charge or any further charge in respect of all or part of the sum secured by this charge), subject to any rights that may have arisen by reason of the absence of chargee's consent, unless the lease is authorised by section 99 of the Law of Property Act 1925.”.
Lodgement of the lease being varied
In many circumstances, we will have a copy of the varied lease in our files. However, there can be times when we may not so if you hold a copy then it is recommended that you lodge it to avoid delays. Remember when the old lease was unregistered we will not hold a copy and you will always need to supply one.
New lease subject to the existing lease
Sometimes, after a registration has been completed, we get queries about why we haven't closed an existing leasehold title. The reason is that if a new lease contains a specific declaration that it is 'subject' to the existing lease then the automatic surrender will not take place and we cannot close the title. The lease is then registered as concurrent. This does not apply where the extension is contained in a deed of variation.