3.2 Landlord’s Counter-Notice Under Section 45: Responses and Deadlines

Edited by Ashley Connell

Leasehold Enfranchisement Solicitor at Hetts

Statutory Basis for the Section 45 Counter-Notice

Section 45 of LRHUDA 1993 delineates the landlord's obligation to respond to a tenant's initial notice under Section 42, framing the counter-notice as a pivotal document that either admits the claim, proposes alternatives, or contests entitlement. The relevant subsections provide:

(1) Where a notice is given by a tenant under section 42, then (subject to subsection (3)) the landlord shall by notice (in this Chapter referred to as a "counter-notice") given to the tenant in accordance with this section either:

(a) admit that the tenant had on the relevant date the right to acquire a new lease of his flat; or

(b) state that he does not admit that the tenant had such a right on that date and specify which of the requirements of section 39, or which of the matters specified in section 40(1), are not or is not satisfied in relation to the tenant's acquisition of such a new lease (specifying also the flats to which any objection under section 40(1) relates).

(2) A counter-notice must comply with one of the following requirements, that is to say:

(a) if the landlord admits that the tenant had the right to acquire a new lease of his flat, the counter-notice must state which (if any) of the proposals contained in the tenant's notice are not accepted by the landlord and specify, in relation to any proposal which is not accepted, the landlord's counter-proposal;

(b) the counter-notice must specify (without prejudice to any additional claim which may be made under section 47) that, in the event of the tenant's right to acquire a new lease being established, the landlord will claim to be entitled to the benefit of section 61 in relation to the acquisition of the tenant's new lease; or

(c) the counter-notice must contain such a statement as is mentioned in paragraph (a) and such a specification as is mentioned in paragraph (b).

(3) Where there are one or more intermediate leases of the tenant's flat, or of any part of it, then in relation to the reversion in the flat, or (as the case may be) in that part of it, subsection (1) shall have effect with the substitution for references to the landlord of references to the immediate landlord under the intermediate lease or (as appropriate) to the landlord having the reversion in that part.

(4) A counter-notice must specify an address in England and Wales at which notices may be given to the landlord under this Chapter.

(5) A counter-notice must be given to the tenant within the appropriate period, that is to say, before the date specified in the tenant's notice in accordance with section 42(3)(f).

This section operates within Chapter II of the Act, interfacing with Section 42 (tenant's claim notice) and subsequent provisions like Section 48 (applications to tribunal) and Section 56 (grant of new lease). If the counter-notice admits the right, it must address each proposal in the Section 42 notice, either accepting, rejecting, or counter-proposing terms such as premium, lease duration (typically 90 years added), and ground rent (reduced to a peppercorn). Contested claims require specific grounds under Sections 39 or 40. Notably, failure to serve a valid counter-notice results in the landlord being deemed to admit the claim on the tenant's terms, per Section 45(1), subject to court intervention under Section 49.

Cross-references include Section 47, allowing redevelopment claims to resist the extension, and Section 99, governing service mechanics. The Leasehold and Freehold Reform Act 2024, with provisions commencing progressively from March 2025, amends aspects of valuation and eligibility but preserves the notice service regime under LRHUDA 1993 for now.

Timelines for Serving the Section 45 Counter-Notice

Timelines under Section 45 are stringent, tethered to the tenant's Section 42 notice, which must contain the deadline to respond by, and that deadline must be at least two months after the date of receipt. The "appropriate period" in Section 45(5) mandates service by that date, ensuring landlords act promptly to preserve their position.

Critical phases include:

• Receipt of Section 42 Notice: Service triggers the clock. Landlords should verify receipt date, accounting for postal presumptions under Section 7 of the Interpretation Act 1978 (deemed service on the second working day after posting).
• Response Window: Minimum two months, but the specified date may extend this. Late service invalidates the counter-notice, enabling the tenant to apply for a vesting order under Section 49, enforcing the lease on their terms.
• Post-Service Implications: A valid counter-notice admitting the right initiates a two-month negotiation period (Section 48(1)). Unresolved disputes allow tribunal application within six months of the counter-notice. Contested s.42 notices prompt court applications under Section 46 within two months.
• Intervening Events: If multiple landlords exist (e.g., intermediate lessors), each must serve per Section 45(3), coordinated via the competent landlord (Section 40(1)). Delays here risk deeming admission.

Solicitors must calendar these deadlines rigorously, factoring bank holidays and service proofs to avoid forfeiture of rights. The freeholder's solicitor should very early on request from the leaseholder's representative the Land Registry title deduction, the 10 per cent deposit (minimum £250), and instruct a valuer as early as possible. Tell the valuer to provide the report at least two weeks prior to the deadline to serve, so as to allow the Section 45 notice to be served in time, without pressure to account for unforeseen time off work or similar contingencies.

Methods and Requirements for Service

Service adheres to Section 99 of LRHUDA 1993, which standardises procedures for Chapter II notices:

(1) Any notice required or authorised to be given under this Part:

(a) shall be in writing; and

(b) may be sent by post.

(2) Where in accordance with Chapter I or II an address in England and Wales is specified as an address at which notices may be given to any person or persons under that Chapter:

(a) any notice required or authorised to be given to that person or those persons under that Chapter may (without prejudice to the operation of subsection (3)) be given to him or them at the address so specified; but

(b) if a new address in England and Wales is so specified in substitution for that address by the giving of a notice to that effect, any notice so required or authorised to be given may be given to him or them at that new address instead.

(3) Where a tenant is required or authorised to give any notice under Chapter I or II to a person who:

(a) is the tenant's immediate landlord, and

(b) is such a landlord in respect of premises to which Part VI of the Landlord and Tenant Act 1987 applies,

the tenant may, unless he has been subsequently notified by the landlord of a different address in England and Wales for the purposes of this section, give the notice to the landlord:

(i) at the address last furnished to the tenant as the landlord's address for service in accordance with section 48 of that Act; or

(ii) if no such address has been furnished, at the address last furnished to the tenant as the landlord's address in accordance with section 47 of that Act.

(4) Subsections (2) and (3) apply to notices in proceedings under Chapter I or II as they apply to notices required or authorised to be given under that Chapter.

(5) Any notice which is given under Chapter I or II by any tenants or tenant must be signed by or on behalf of each of the tenants, or (as the case may be) by or on behalf of the tenant, by whom it is given.

(6) The Secretary of State may by regulations prescribe:

(a) the form of any notice required or authorised to be given under this Part; and

(b) the particulars which any such notice must contain (whether in addition to, or in substitution for, any particulars required by virtue of any provision of this Part).

Postal service predominates, with addresses sourced from the Section 42 notice or prior disclosures under the Landlord and Tenant Act 1987. Electronic methods, such as email, are precluded, as confirmed in case law. The counter-notice must specify an English or Welsh address for further service (Section 45(4)).

Prudent practice involves serving at both the address in the Section 42 notice and any alternative known address, to forestall validity challenges. Methods encompass recorded delivery for tracking and non-recorded first-class post with a Post Office certificate of posting, invoking the Interpretation Act presumption of timely delivery unless rebutted.

Judicial Insights from Cases on Service of Section 45 Counter-Notices

Case law underscores the perils of procedural lapses in Section 45 service, with courts enforcing strict compliance to uphold statutory intent.

In Calladine-Smith v Saveorder Limited [2011] EWHC 2501 (Ch), the High Court addressed non-receipt of a posted counter-notice. Despite proper posting, the tenant proved non-delivery on the balance of probabilities, overcoming the Interpretation Act presumption. The counter-notice was deemed invalid, highlighting the need for robust proof, such as certificates and tracking.

St Ermin's Property Company Ltd v Tingay [2002] EWCA Civ 1845 emphasised adherence to statutory form. The landlord's counter-notice omitted required particulars under Section 45(2), rendering it defective. The Court of Appeal rejected substantial compliance arguments, affirming that incomplete notices fail to engage the process.

Burman v Mount Cook Land Ltd [2001] EWCA Civ 1712 examined address compliance. The counter-notice was served at an incorrect address, invalidating it. The court stressed Section 99(2) requirements, advising landlords to verify addresses meticulously.

Natt v Osman [2014] EWCA Civ 1520, though on Section 13, extended to Section 45 by analogy, ruled email service invalid under Section 99, as "in writing" implies physical form absent express provision.

Hastelow v Kelly [2009] EWHC 3139 (Ch) considered defective content in counter-notices, holding that failure to specify counter-proposals properly voids admission, potentially deeming the claim admitted.

Westbrook Dolphin Square Ltd v Friends Life Ltd [2014] EWHC 2433 (Ch) scrutinised timing, confirming that exceeding the Section 42 deadline nullifies the counter-notice, underscoring calendar management.

These authorities illustrate that service disputes often hinge on evidence and form, with tenants leveraging invalidity to secure favourable terms.

Practical Tips for Solicitors Handling Section 45 Counter-Notices

Solicitors representing landlords must orchestrate Section 45 service with forensic care, blending statutory fidelity with tactical acumen.

• Pre-Service Preparation: Upon Section 42 receipt, confirm the response deadline and validate the tenant's address via Land Registry or prior records. Draft the counter-notice to mirror Section 45(2) requirements, incorporating valuer input on premiums and terms. The freeholder's solicitor should very early on request from the leaseholder's representative the Land Registry title deduction, the 10 per cent deposit (minimum £250), and instruct a valuer as early as possible. Tell the valuer to provide the report at least two weeks prior to the deadline to serve, so as to allow the Section 45 notice to be served in time, without pressure to account for unforeseen time off work or similar contingencies.
• Content Verification: Ensure the notice admits or denies entitlement explicitly, with grounds if contested, and addresses all Section 42 proposals. Include redevelopment claims under Section 47 if applicable, and specify a valid service address.
• Service Execution: Serve via first-class post with certificate of posting; augment with recorded delivery for evidence. Use both specified and alternative addresses to mitigate risks. Retain envelopes, stamps, and proofs for potential challenges.
• Evidentiary Safeguards: Document posting meticulously, including affidavits if needed, to invoke Interpretation Act presumptions. Avoid electronic methods to sidestep invalidity per Natt v Osman.
• Timeline Management: Diarise the deadline with buffers for internal reviews. If delays loom, consider extensions via agreement, though rare.
• Post-Service Strategy: Monitor tenant acknowledgments; if disputed, prepare for Section 46 or 49 proceedings. Coordinate with surveyors for negotiations, anticipating tribunal under Section 48.
• Multi-Party Coordination: In complex hierarchies, ensure intermediate landlords serve promptly, aligning with the competent landlord's response.

These measures fortify the counter-notice's efficacy, positioning landlords advantageously in the enfranchisement arena.

Contesting a Section 42 Notice: The Role of the Section 45 Counter-Notice

If the freeholder contests the tenant’s right to a new lease under the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993), they must still serve a Section 45 counter-notice, and it is prudent to do so on a "without prejudice" basis to the validity of the Section 42 notice. This approach safeguards the freeholder’s position while allowing them to challenge the tenant’s claim. Below, the rationale, procedural requirements, and practical considerations are explained, tailored for property lawyers, surveyors, and advisors, maintaining a formal tone and structure.

Why Serve a Section 45 Counter-Notice When Contesting?

Under Section 45(1)(b) of LRHUDA 1993, the landlord must serve a counter-notice by the deadline specified in the tenant’s Section 42 notice (at least two months from receipt, per Section 42(3)(f)). This counter-notice must either admit the tenant’s right to a new lease or deny it, specifying the grounds of objection (e.g., non-compliance with Section 39 eligibility criteria or Section 40(1) matters). Failure to serve a valid counter-notice within this period results in the landlord being deemed to admit the tenant’s claim on the proposed terms (Section 45(1)), potentially allowing the tenant to apply for a vesting order under Section 49 to enforce the lease extension.

Even if the freeholder intends to contest the validity of the Section 42 notice (e.g., due to improper service, ineligible leaseholder, or defective content), serving a Section 45 counter-notice is critical. Not serving one risks waiving the right to challenge, as the deeming provision takes effect. By serving the counter-notice "without prejudice" to the validity of the Section 42 notice, the freeholder preserves their ability to dispute the claim’s foundation while complying with statutory obligations. This dual approach mitigates the risk of procedural default and keeps all options open for subsequent court applications under Section 46.

Statutory and Procedural Context

Section 45(1) and (2) require the counter-notice to:

• Admit the tenant’s right (Section 45(1)(a)) or deny it with specific reasons (Section 45(1)(b)).
• If admitting, address each proposal in the Section 42 notice (e.g., premium, terms) with acceptance or counter-proposals (Section 45(2)(a)).
• If contesting, specify grounds (e.g., landlord’s interest being held for public purposes).
• Optionally, claim redevelopment rights under Section 47 (Section 45(2)(b)).

Section 46(1) mandates that if the landlord denies the tenant’s right in the counter-notice, they must apply to the court within two months of serving it to determine the dispute. Failure to apply within this period deems the tenant’s right admitted (Section 46(2)), reinforcing the importance of timely action.

Serving the counter-notice "without prejudice" allows the freeholder to challenge the Section 42 notice’s validity (e.g., improper service or content) in court while addressing the substantive claim as a fallback. This is particularly relevant given judicial emphasis on strict compliance, as seen in cases like St Ermin's Property Company Ltd v Tingay [2002] EWCA Civ 1845, where defective counter-notices were invalidated for omitting required particulars.

Practical Considerations for Solicitors

When a freeholder intends to contest the Section 42 notice and apply to the court, solicitors should adopt the following approach:

• Serve the Counter-Notice Promptly: Regardless of the challenge, serve the Section 45 counter-notice by the specified deadline. Include a statement that the response is "without prejudice to the landlord’s contention that the Section 42 notice is invalid" to preserve the right to dispute its validity in court. Specify any grounds for denying the tenant’s right (e.g., eligibility issues) and, if applicable, address the Section 42 proposals as a contingency to avoid being deemed to admit them.
• Challenge Validity Explicitly: If contesting the Section 42 notice’s validity (e.g., incorrect address, unsigned notice, or failure to meet Section 42(3) requirements), articulate this in the counter-notice alongside substantive objections. This dual approach was endorsed in Burman v Mount Cook Land Ltd [2001] EWCA Civ 1712, where the court invalidated a notice served at an incorrect address, highlighting the need for precision.
• Prepare for Section 46 Application: Plan for the court application within two months of the counter-notice (Section 46(1)). Gather evidence supporting the invalidity claim (e.g., Land Registry records, proof of non-receipt, or leaseholder ineligibility) and substantive objections (e.g., redevelopment intentions under Section 47). The Westbrook Dolphin Square Ltd v Friends Life Ltd [2014] EWHC 2433 (Ch) case underscores the consequences of missing deadlines, as late service nullified the counter-notice.
• Request Documentation Early: As advised in the previous article, immediately request the leaseholder’s Land Registry title deduction and the 10 per cent deposit (minimum £250) to verify ownership and secure funds for costs (Section 60). Instruct a valuer promptly to assess the premium, even if contesting, to prepare for negotiations or tribunal if the court upholds the claim. Ensure the valuer’s report is ready at least two weeks before the counter-notice deadline to avoid last-minute pressures, as delays (e.g., unforeseen absences) could jeopardise compliance.
• Service Robustness: Serve the counter-notice at both the address in the Section 42 notice and any known alternative address, using recorded delivery and non-recorded first-class post with a certificate of posting. This aligns with Calladine-Smith v Saveorder Limited [2011] EWHC 2501 (Ch), where proof of posting was critical to invoking the Interpretation Act 1978 presumption of delivery.
• Document Intent: Clearly record in correspondence and internal notes that the counter-notice is served without prejudice to the validity challenge. This strengthens the position in court, showing compliance with statutory duties while reserving rights, as supported by the principle in Hastelow v Kelly [2009] EWHC 3139 (Ch) that defective content can void notices unless comprehensively addressed.

Case Law Reinforcement

The approach of serving "without prejudice" aligns with judicial pragmatism. In Natt v Osman [2014] EWCA Civ 1520, though concerning Section 13, the court’s rejection of email service underscored the need for strict adherence to Section 99’s postal requirements. Similarly, St Ermin's illustrates that partial compliance risks invalidity, so a comprehensive counter-notice—covering both substantive responses and validity challenges—avoids such pitfalls. By serving a robust counter-notice, the freeholder ensures compliance while positioning for a Section 46 challenge, as delays or omissions could otherwise cede the claim, per Westbrook.

Strategic Advantage

Serving the counter-notice without prejudice allows the freeholder to contest the Section 42 notice’s validity in court while maintaining a fallback position if the challenge fails. It prevents the tenant from capitalising on non-service to secure a vesting order and ensures the landlord’s objections (e.g., redevelopment or eligibility) are preserved for judicial scrutiny. Solicitors should draft the counter-notice to address all statutory requirements, explicitly reserving the right to challenge validity, and coordinate with valuers to prepare for all outcomes, thereby fortifying the freeholder’s stance in the enfranchisement process.