7.2 Incapacitated Tenants: Power of Attorney and Court of Protection
Overview
As of 31 January 2025, amendments introduced by the Leasehold and Freehold Reform Act 2024 (LFRA 2024) have removed the requirement for tenants to own a lease for at least two years before claiming a lease extension under the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993). This reform simplifies the process for qualifying tenants, including those acting on behalf of incapacitated leaseholders through mechanisms such as a Power of Attorney or Court of Protection deputyship. Serving a Section 42 notice remains a critical step in initiating a lease extension, requiring careful adherence to legal and procedural requirements.
When a tenant lacks mental capacity to manage their property affairs, a duly appointed attorney under a Lasting Power of Attorney (LPA) or a deputy appointed by the Court of Protection can act on their behalf to pursue a lease extension, provided the tenant qualifies under LRHUDA 1993 (i.e., holds a long lease of a flat, typically over 21 years). These mechanisms ensure that incapacitated tenants are not disadvantaged in exercising their statutory rights, preserving the value of their leasehold interest.
Key Issues for Incapacitated Tenants
1. Legal Authority to Act: Power of Attorney and Court of Protection
A leaseholder who lacks mental capacity, as defined under the Mental Capacity Act 2005, cannot personally serve a Section 42 notice or manage the lease extension process. In such cases, a person with legal authority must act on their behalf:
Lasting Power of Attorney (LPA): An LPA for property and financial affairs allows the appointed attorney to manage the leaseholder’s assets, including serving a Section 42 notice and completing the lease extension process. The LPA must be registered with the Office of the Public Guardian (OPG) to be valid. The attorney must act in the leaseholder’s best interests, as mandated by Section 4 of the Mental Capacity Act 2005, which may involve obtaining a professional valuation to ensure the lease extension enhances the estate’s value.
Court of Protection Deputyship: If no LPA exists, an application can be made to the Court of Protection to appoint a deputy to manage the leaseholder’s property and financial affairs. The deputy, typically a solicitor or trusted individual, is authorised to act under a court order, which may explicitly include the power to pursue a lease extension under LRHUDA 1993. The Court of Protection ensures that actions taken are in the leaseholder’s best interests, and deputies must comply with strict reporting requirements to the OPG.
In both cases, the attorney or deputy must confirm the leaseholder’s eligibility as a qualifying tenant (i.e., holding a long lease of a flat) and ensure the lease is registered at HM Land Registry in the leaseholder’s name. The registration gap—the delay between a lease transfer and Land Registry update—does not typically apply to incapacitated tenants unless the lease was recently acquired, as legal title remains with the leaseholder.
2. Procedural Requirements for Lease Extensions
The process for lease extensions remains the same whether pursued by the leaseholder or their representative. The attorney or deputy serves the Section 42 notice on the competent landlord, specifying the flat’s details, proposed premium, and terms. The notice must be signed by the attorney or deputy, clearly stating their capacity (e.g., “as attorney for [Leaseholder’s Name]” or “as deputy appointed by the Court of Protection”). The landlord may request evidence of the LPA or deputyship order to verify authority.
Prior to LFRA 2024, the two-year ownership requirement posed challenges for attorneys or deputies acting for leaseholders who had not owned the lease for long. The repeal of this requirement under Section 31 of LFRA 2024 allows immediate action upon confirmation of authority, streamlining the process. However, delays in obtaining an LPA registration (typically 8–12 weeks) or a deputyship order (several months) can hinder prompt action, particularly for leases nearing the critical 80-year threshold, where marriage value increases premiums significantly.
3. Best Interests and Financial Considerations
Both attorneys and deputies are legally obliged to act in the leaseholder’s best interests. Extending a lease, especially one with less than 80 years remaining, typically enhances the property’s value and marketability, benefiting the leaseholder or their estate. The premium, calculated under Schedule 13 of LRHUDA 1993, depends on factors such as the remaining lease term, ground rent, and property value. Attorneys and deputies should engage a specialist valuer to ensure the proposed premium is reasonable and reflects market conditions.
Costs are a key consideration. Under Section 60 of LRHUDA 1993, the leaseholder (via their representative) is liable for the landlord’s reasonable professional fees from the date of the Section 42 notice, whether the claim succeeds or not. Attorneys and deputies must weigh these costs against the financial benefits of extension, particularly for short leases. The Court of Protection may scrutinise high-cost decisions by deputies, requiring justification that the extension serves the leaseholder’s interests.
4. Practical Challenges and Mitigations
Verification of Authority: Landlords may challenge the validity of a Section 42 notice if the attorney’s or deputy’s authority is unclear. To mitigate this, representatives should provide a certified copy of the LPA or deputyship order with the notice. For LPAs, confirmation of OPG registration is essential. Deputies must ensure the court order explicitly authorises property transactions or lease extensions.
Delays in Authority Establishment: Obtaining an LPA or deputyship order can take months, risking premium increases if the lease term drops below 80 years. Where urgency is critical, an interim application to the Court of Protection for a single-issue order (e.g., authorising the lease extension) can expedite the process, though legal costs may exceed £2,000.
Assignment and Sale: If the property is to be sold (e.g., to fund care), the attorney or deputy must assign the benefit of any Section 42 notice simultaneously with the lease transfer under Section 43(3) of LRHUDA 1993. Failure to do so invalidates the claim, requiring a new notice post-transfer. LFRA 2024’s removal of the two-year ownership rule allows new owners to act immediately, facilitating sales.
5. Case Law and Legal Precedents
There is limited case law directly addressing lease extensions by attorneys or deputies, but principles from related cases apply. In Re P (Statutory Will) [2009] EWHC 163 (Ch), the Court of Protection emphasised that decisions affecting a person’s property must demonstrably benefit them, reinforcing the need for deputies to justify lease extensions with valuation evidence. Similarly, Villarosa v Ryan [2018] EWHC 1914 (Ch) clarified that personal representatives could act independently of special provisions, a principle now extended by LFRA 2024 to all qualifying tenants, including those acting via attorneys or deputies.
Challenges may arise if landlords dispute the representative’s authority. In such cases, the First-tier Tribunal (Property Chamber) can determine the validity of a notice under Section 48 of LRHUDA 1993, provided evidence of authority (e.g., LPA or court order) is robust.