Assign the Benefit of a Lease Extension
A fundamental requirement of a leaseholder's right to extend a residential lease is that the leaseholder must have owned the property for a minimum period of two years.
Fortunately, there is a method available to leaseholders, allowing them to circumvent this two year ownership rule, but it must be done before a lease is sold to a new proprietor:
Any leaseholder who has the right to exend their lease may assign the benefit of this right to a new owner. Therefore anyone who is interested in purchasing a leasehold property, who intends to extend their lease within 2 years of their ownership, must ensure that the seller assigns their right to extend the lease by a formal deed of assignment.
Procedure to assign the benefit
- Ensure that the outgoing has the right to extend the lease (owned the property for at least two years.
- The outgoing leaseholder must serve a valid Section 42 notice on the landlord.
- The outgoing leaseholder must execute a deed of assignment and hand this to the incoming tenant on completion of the sale.
- The new leaseholder has the right to extend the lease, as though they had owned the flat for at least two years.
This method allows the buyer of a flat to pursue a lease extension immediately after completion of the purchase without having to wait the statutory minimum period of two years. If you are purchasing a flat with less than circa 85 years remaining on the lease, it is strongly recommended that you ensure the seller agrees to assign the benefit of a section 42 notice and further sign a deed of assignment of this benefit to you.