User:Johnhem/Section 42 Notice

The United Kingdom 1993 Leasehold Reform Housing and Urban Development Act (as amended) provides the right for the grant of a new lease for a term of 90 years, plus the present unexpired term, all at a peppercorn rent (that is, rent free). This right is initiated by the service of a Section 42 Notice of Claim (otherwise known as the Tenant’s Notice) by a tenant on the competent landlord. Once the formal procedure is started by the service of the Section 42, it then follows a prescribed route. Although this is the beginning of the formal process for acquiring the ninety year extension, it should follow a period of preparation to ensure that you are fully equipped and advised to complete the acquisition. The requirements of the Tenant's Notice are set out in S42(3) of the Leasehold Reform Act 1993. It must contain the following:

The tenant’s notice must— (a) state the full name of the tenant and the address of the flat in respect of which he claims a new lease under this Chapter; (b) contain the following particulars, namely— (i) sufficient particulars of that flat to identify the property to which the claim extends, (ii) such particulars of the tenant’s lease as are sufficient to identify it, including the date on which the lease was entered into, the term for which it was granted and the date of the commencement of the term, (iii) such further particulars as are necessary to show that the tenant’s lease is, in accordance with section 8 (as that section applies in accordance with section 39(3)), a lease at a low rent, and (iv) particulars of the period or periods falling within the preceding ten years for which the tenant has occupied the whole or part of the flat as his only or principal home; (c) specify the premium which the tenant proposes to pay in respect of the grant of a new lease under this Chapter and, where any other amount will be payable by him in accordance with any provision of Schedule 13, the amount which he proposes to pay in accordance with that provision; (d) specify the terms which the tenant proposes should be contained in any such lease; (e) state the name of the person (if any) appointed by the tenant to act for him in connection with his claim, and an address in England and Wales at which notices may be given to any such person under this Chapter; and (f) specify the date by which the landlord must respond to the notice by giving a counter-notice under section 45.

Note the premium quoted in the Section 42 Notice may not be the price eventually agreed after negotiation (or after being determined by a LVT), but it will be the figure from which the landlord calculates the deposit he requires (10% or a minimum of £250). The premium proposed must be reasonable – if too low the Notice may be found invalid.

The Notice triggers the statutory procedures for acquiring the new lease and the tenant is liable for the landlord's reasonable valuation and legal costs as from the date he received the Notice. It is therefore important that the Notice contains no inaccuracies or errors because, although these can be corrected by application to the County Court, it is an expense that should be avoided. An incomplete Notice can be rejected as invalid.

A protection for leaseholders is the ability to register the Section 42 Notice with the Land Registry, typically by a unilateral notice (UN1) in registered land. This provides protection for the leaseholder against the landlord's sale of the freehold since any purchaser of the freehold, subsequent to the registration of the Tenant's Notice will take the freehold subject to the application for the new lease. The procedure will therefore be able to continue as though the new owner had originally received the Tenant's Notice.

After the Section 42 Notice is served and registered, it may be assigned with the lease. This means that a tenant can sell their flat and the purchaser can avoid the normal two years ownership qualification. The date of service of the Section 42 Notice also fixes the "valuation date" as the same date as the Notice. No matter how long the negotiation or determination of the price takes, it will be based on the valuation factors at the date of service of the Tenant's Notice.


 * Residential Property Tribunal Service- UK Government agency which, among other things, operates the Leasehold Valuation tribunals