Time to Act - What if your long lease runs out?

This type of tenancy is different from the ‘standard’ domestic rental agreement (the assured periodic tenancy, or ‘AST’) as it has far greater security of occupation for the tenant and the rent is effectively subject to statutory control, and the parties will have to apply to a rent assessment committee to have the rent set if it cannot be agreed.

However, the freeholder can serve notice prior to the end of the former long lease bringing the tenancy to an end. This has to be done not more than a year before and not less than six months before the date on which the long lease will come to an end.

If the freeholder does this, it is likely they will also propose the rent for the new assured tenancy. If they do this you must respond within two months if you want to challenge the proposed rent, otherwise it will be binding on you.

Also, if you are served with this kind of notice and want to make a claim to extend the lease (or buy the freehold) you will have to do this within two months of receiving the notice for a lease extension, or four months for a claim to the freehold, or else the right to do this will be lost.

It is therefore vitally important not to ignore any notices served by the freeholder during this time and to get proper advice in relation to them.

This is also an important consideration if you are thinking that you (or your heirs) might like to sell the property during this time. While the value might be quite minimal given the extreme shortness of the lease, the one thing that would have value would be the right to initiate the claim to a new lease under the 1993 Act, which any purchaser would not have because of the need to have two years’ ownership prior to taking this step.

A final point to consider is the issue of ‘dilapidations’. This is rarely considered in the case of residential property held on a long lease, but just as might be the case with any lease, if the lease runs out the landlord is entitled to damages for any lack of repair in the property when it is handed back.

If the lease is renewed then this issue will be avoided. However, if you were to decide to hand the property back to the landlord it would be worth factoring this into any discussions/negotiations and on the surrender of the lease/handover of the property.