https://hmlandregistry.blog.gov.uk/2016/09/06/lease-extensions-avoid-common-issues/

Lease extensions: how to avoid the most common issues

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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.

eDRS-7

Fees

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.

Lease extension

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.

Prescribed clauses

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.

Charge

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.

Restriction

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.

For guidance on all aspects of the extension of leases see Practice Guide 28 - Extension of leases. Practice guide 27 covers those made under leasehold reform legislation.

18 comments

  1. Comment by Marta posted on

    Hi Jodie,

    Thank you for your blog, I have a question!

    Can I extend my lease without a solicitor, having in mind that the freeholder has his solicitor?

    Could you reply through my email please?

    Much appreciated,

    Thanks,

    Marta

    Reply
    • Replies to Marta>

      Comment by adamh posted on

      Marta - you can extend your lease without using a solicitor although we would recommend that you do use one. If your property is mortgaged then your lender would need to be involved as well and they are likely to insist on your using a solicitor also

      Reply
  2. Comment by Dave posted on

    Hi

    This blog is very helpful as I intend to try without using a solicitor

    How long does it take to extend a lease by Deed of Variation where there is no mortgage and the freehold is owned by the leaseholder ?
    Thanks

    Reply
  3. Comment by Carmelo posted on

    Hi
    I have bought a flat in 2007 with a lease due to expire in 2052. At the time the vendor extended the lease to another 99 years prior to the sale.
    Now I am trying to re mortgage with another lender and I discovered,looking in the HM land registry, that the lease still stands to expire in 2052.
    I have recovered from the seller the letter of his solicitor reporting the lease extension money paid.
    So why the lease extension does not appear in the HM land registry ?
    What I should do to have this extension registered ?
    Who was responsible to do that ?
    Thanks
    Carmelo

    Reply
    • Replies to Carmelo>

      Comment by AdamH posted on

      Carmelo - if the lease was extended then we would need an application to register it. I assume none was submitted. Our Practice Guide explains how lease extensions can be registered https://www.gov.uk/government/publications/extension-of-leases
      Who was responsible all depends at what point your own solicitor completed on the purchase. Did they ask the seller to extend the lease before buying or did they agree to register both but for some reason did not? I would suggestt going back to them and asking although 10 years on they may not have any record but should be able to assist by making some enquiries for example

      Reply
  4. Comment by babul posted on

    Hi
    I have agreed to a lease premium with my landlord for lease extension, I have a charge over the property with Halifax. there is no other restriction only the mention of the charge.

    Do I need consent from my lender before completing the lease or I can complete without letting my lender know. The landlord referred me to section 58 of Leasehold Reform act stating that i do not need to get consent as the new lease will be automatically noted and carry the excisteh charge.

    Please confirm if this is true so I can complete the lease extension and sell the property. I dont want to complete and get stuck later
    Regards
    Ahmed

    Reply
    • Replies to babul>

      Comment by AdamH posted on

      Babul - from a registration perspective if there is no restriction on the title requiring the lender;s consetn then we would not require it. However there are two things to also consider. The first being the terms of your mortgage may most likely include a need to contact and confirm with the lender any changes being made to the lease. And secondly, and crucially, any extension of the tem is in effect a surrender and regrant of the lease. As such a new leasehold title will be created so you will either need the lender to discharge the old charge and you then execute a new one or, and this is the normal route, obtain a Deed of Substituted Security form your lender. That Deed effectively switches the mortgage to the new extended leasehold title. We can't register the extension without the discharge or deed as mentioned as their legal charge prevents the surrender otherwise

      Reply
  5. Comment by Rick posted on

    H Jodie

    I have been granted an extended lease by the freeholder (same start date). I was not represented by a solicitor. The solicitor for the freeholder has sent me the new lease and told me I need to register it with the Land Registry. Can I do this on-line? If not, is form AP1 the correct form to use?

    Reply
    • Replies to Rick>

      Comment by ianflowers posted on

      Rick - I'm responding as Jodie is currently unavailable. Currently, there is not an online service for these applications submitted by the public so you will need to submit it by post to the address shown here: https://www.gov.uk/guidance/hm-land-registry-address-for-applications. If your landlord's title is registered with us (it usually will be) then use form AP1. The new lease will normally be in the form a deed of variation of the existing lease which takes effect as a surrender of that existing lease and a grant of a new lease.

      You also need to consider the points in the blog, e.g. considering encumbrances on the existing leasehold title such as a mortgage. Also our Practice Guide relating to the determination of leases - https://www.gov.uk/government/publications/leases-determination/practice-guide-26-leases-determination#determination-surrender-deed . The guide is written for legal professionals who generally lodge this type application and may therefore contain some unfamiliar terms.

      If you are unsure how to proceed, you may want to consider taking independent advice, for example, from Citizen's Advice or from a conveyancer such as a solicitor.

      Reply
  6. Comment by M Dodds posted on

    Ian - good afternoon. I am in the process of obtaining a lease extension from 99 to 999 years for my flat and parking space which are mortgage free. The Freehold title for both lies with a small company consisting of all 23 leaseholders, of which I am the voluntary Chairman. With the remaining term down to 80 years or so, we have recently granted 4 extensions without valuation or fee to the freeholder (ourselves); as such the time seems right to extend my own lease and given the circumstances I am not anticipating any issues on that front. I propose that my "new" leases will be in the same format as the others i.e. a short document singed by myself, a representative of the board and witnessed by the company secretary, and setting out the existing titles/address/new term/rent(peppercorn) etc as well as the request for the landlord to grant the extension to the Tenant under the same terms,exceptions and reservations as before. Once signed, I had hoped to register the new lease using e-DRS, however noting your comments above, it would seem that option is not available to me and instead I am required to complete form AP1. Having done so, can you advise if I need attach the new lease together with form ID1 for identification, or do I attempt to incorporate prescribed clauses in the AP1 format? Re the fee; the property/parking space is valued at circa £400,000. As there are essentially two leases, I am unsure as to whether the fee is £40 or 2 x £40. As you can see, what seemed to be a simple process is raising more than a few queries. Although I live 100 miles away, would it be acceptable to make an appointment, bring the relevant documents with me and complete the registration/transaction in person? Thank you, I am most grateful.

    Reply
    • Replies to M Dodds>

      Comment by ianflowers posted on

      Hello. I note you have already exchanged email correspondence with us in relation to this transaction(s) and so it would best to continue that correspondence if you have any further queries as wouldn't go into such detail on this forum. I would be mindful though that we can only give procedural advice, for example, on completing our forms. We cannot advise on legal issues such as the format and content of the lease extension. If you are unsure how to proceed, it would be worth considering seeking independent legal advice although there is no obligation for you to do so. Also bear in mind that where any of the parties involved are not legally represented, they will need to have their identity verified either in form ID1 or ID2 (if a corporate body). If verification by HM Land Registry required, those parties will need to attend in person together and at the same time the application is lodged for registration.

      That said, there shouldn't be any need to attend in person, unless ID verification is required for any of the parties involved as mentioned. We would be able to accept the application (if in order) if you visited in person, but we wouldn't be able complete the registration whilst you are in attendance. At the appropriate time, you can ring our Customer Support Centre on 0300 006 0411 to discuss arranging an appointment.

      As to our fees, please see our guidance: https://www.gov.uk/guidance/hm-land-registry-registration-services-fees#leases (you'll need to scroll down to the leases section). Again, it's probably best to wait until you have addressed all the aspects before checking the fees payable but as to scale fees, these are payable on each transaction / lease.

      Reply
  7. Comment by Samira Noor posted on

    Hi,

    I wanted to know how long it takes once my solicitor has made on line application for registering lease application? I am asking as I have a deadline for remortgage which depends on the lease extension being registered first.

    Many thanks

    Reply
    • Replies to Samira Noor>

      Comment by AdamH posted on

      Samira - the current average is 58 working days. If your mortgage offer is time-sensitive then your solicitor should submit those details along with a request for us to consider expediting their application

      Reply
  8. Comment by C W Siu posted on

    Hi Jodie

    I would like to register my new lease extension online. Do I have to apply for access via this:-

    "Apply for HM Land Registry Business e-services" and setup VDD.

    Thanks for your attention
    CW

    Reply
    • Replies to C W Siu>

      Comment by ianflowers posted on

      Hi. I am responding as Jodie is currently unavailable.

      If you are not acting in a business capacity and do not intend to lodge applications with us on a regular basis, we would not be able to accept an application from you for Business e-services. Any registration application would need to be made in paper form.

      As well as Jodie's blog, our Practice Guide 28 may also be of interest - https://www.gov.uk/government/publications/extension-of-leases . Please note that the guide has been written for legal professionals who lodge the majority of these applications and it may therefore contain some unfamiliar terms.

      Reply
  9. Comment by Beth W posted on

    Hi there,

    We are extending our lease and selling our property at the same time. The sale is dependant on the registration of the lease. My solicitor is going to ask if our application ca be expedited, if accepted how long will registration take? Our sale is very time sensitive and we have missed one deadline for exchange as it is.

    Many thanks
    Beth

    Reply
    • Replies to Beth W>

      Comment by AdamH posted on

      Beth - if we are able to expedite it then it is normally considered within 10 working days. Everything really depends on what other applications may be in play re the freehold title for example and then whether what has been submitted is in order

      Reply

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