Section 45 Counter-Notice: The Landlord's Response
The Section 45 Counter-Notice is a critical milestone for a freeholder, as it formally sets out their position on the premium they require to grant a lease extension under the statutory lease extension process. The drafting of this document must be flawless, but before it is even drafted, the freeholder's solicitor must first ensure the leaseholder actually has the legal right to extend.
For a freeholder, a lease extension is an opportunity to realise the value of their asset. However, with the legal landscape undergoing continuous reform, the risk is that a freeholder makes a procedural error in their response, loses their negotiating position, and faces an expensive trip to the Tribunal.
In this article, we explain exactly what triggers a Section 45 Counter-Notice, what the notice must contain, how to value a lease extension premium, the strict statutory timeframes, and the costs involved—including the risks of having to go to the First-tier Tribunal.
What triggers a need for a Section 45 Counter-Notice?
The formal lease extension process follows a strict statutory order of events. To extend their lease by an additional 90 years, a leaseholder must serve the freeholder (the competent landlord) with a Section 42 Notice. This notice contains mandatory legal information, but the most important detail for the freeholder is the premium the leaseholder is proposing to pay.
Just because the Section 42 Notice proposes a specific premium does not mean you have to accept it. Receiving this notice triggers a timeline of actions you must take to protect your position:
- Serve a Preliminary Notice: Upon receiving the leaseholder's Section 42 Notice, the freeholder has a strict 21-day window to serve a preliminary notice. This request legally compels the leaseholder to provide official proof of their title (confirming they have the legal right to extend) and to pay a statutory deposit (typically 10% of the proposed premium or £250, whichever is greater).
- Order a RICS lease valuation: Once the leaseholder's right to extend is verified and the deposit is secured, the freeholder's RICS valuer will calculate a defensible counter-premium so your solicitor can draft the formal Section 45 Counter-Notice.
- Serve a Section 45 Counter-Notice: The freeholder must serve their valid Section 45 Counter-Notice by the exact date specified in the leaseholder's Section 42 Notice (which must give you a minimum of two months to respond). If you miss this statutory deadline, or if the notice is drafted incorrectly, the court can legally force you to grant the lease extension at the leaseholder's original (and often much lower) proposed premium.
Expert Tip: Are you the competent landlord?
A Section 42 Notice must be served on the "competent landlord". While this is usually the absolute freeholder, property titles can sometimes involve complex intermediate or superior leases.
If you are an intermediate landlord holding a head lease, you are only considered the competent landlord if your own lease has a sufficient remaining term to grant the leaseholder their additional 90 years. If your lease is too short, the competent landlord will be the superior landlord or the ultimate freeholder above you.
If an intermediate landlord incorrectly attempts to act as the competent landlord and serves a Counter-Notice without the legal capacity to grant the 90-year extension, the proceedings will be legally invalid. This leads to wasted professional conveyancing fees and potential Tribunal disputes. Always have your solicitor deduce the title first.
CEO of SAM Conveyancing
Key contents of a Section 45 Counter-Notice
The specific information a Section 45 Counter-Notice must contain is legally prescribed within
The landlord's declaration and proposals must explicitly state:
- Whether they accept that you have the statutory legal right to acquire a new lease.
- Which proposals from your Section 42 Notice they accept.
- Which proposals from your Section 42 Notice they reject.
- Their formal counter-proposals for each rejected point (e.g., demanding a higher premium or revised lease terms).
- Whether they intend to apply for an order under Section 47(1) of the Act (asserting an intention to redevelop the premises, though this right is being restricted by newer legislation).
Source:Section 45 of the Leasehold Reform, Housing and Urban Development Act 1993.
- RICS-accredited surveyors to assess the lease premium.
- Specialist lease extension solicitors for freeholders.
- Commercially minded to support you as the freeholder.
- Leave the deadlines to us.
What happens after the Counter-Notice is served?
If the freeholder accepts your proposed premium and terms entirely, the statutory process simply continues toward completion. However, if they issue a counter-offer (which is standard practice), specific statutory deadlines immediately come into effect:
The 2-Month Negotiation Window
Following the date specified in the Section 45 Counter-Notice, a mandatory two-month period begins. During this time, your RICS surveyor will engage directly with the freeholder's surveyor to negotiate the premium. By law, neither party is permitted to apply to the Tribunal during these initial two months.
The 4-Month Tribunal Application Window
Once the initial two-month negotiation period expires, you have exactly four months remaining to apply to the First-tier Tribunal (Property Chamber) if the premium is still disputed. This means all Tribunal applications must be lodged no later than six months from the date the Counter-Notice was served.
What happens if the landlord rejects your offer?
It is incredibly common for freeholders to reject the opening offer and propose a higher premium. This is why your initial Section 42 offer should always be calculated by a specialist RICS valuer, rather than an online calculator.
When the premium is disputed, both respective RICS valuers will share their methodology and local market evidence to find a mutually acceptable figure without needing to go to court.
Critical Risk: You have a strict maximum of six months from the date of the Counter-Notice to either agree on the final terms or lodge an application with the Tribunal. If you fail to do either before this deadline, your claim is legally deemed withdrawn. You will be forced to wait 12 months before you can serve a new notice, during which time your lease will continue to drop and the premium will increase.
When might there be more than one Counter-Notice?
A landlord can only serve one valid Section 45 Counter-Notice in response to a valid Section 42 Notice. However, multiple notices might appear in these specific scenarios:
Response to an Invalid Section 42 Notice
If your original Section 42 Notice was legally non-compliant (e.g., missing prescribed information or served by someone who is not the qualifying leaseholder), the freeholder will serve a Counter-Notice stating that they do not admit your right to a new lease, outlining the specific reasons for the invalidity.
Court Orders a Further Counter-Notice
Under Section 46 and Section 47 of the 1993 Act, if a landlord applies to the court to challenge the validity of your notice or to assert redevelopment rights, and their application is dismissed, the court will declare their original Counter-Notice invalid and legally compel them to serve a fresh one by a specified date.
Top Tip: Weighing up the costs of negotiating
If there is a significant difference between your surveyor's valuation and the landlord's counter-offer, paying for professional negotiation is usually a wise investment.
However, RICS surveyors typically charge between £150 and £300 EXC VAT per hour. Always set a clear cap on your surveyor's negotiation time so their fees do not exceed the amount you are trying to save on the premium.
Moderate Risk: If negotiations fail and you apply to the Tribunal, you must factor in the additional costs. Taking a case to the Tribunal can cost between £2,000 and £4,000 in professional representation fees. Because these costs are rarely recoverable from the freeholder, you must carefully weigh the Tribunal costs against the potential savings on the premium.
Andrew Boast FMAAT is a qualified accountant, conveyancing specialist and author with over 25 years of experience in the UK property sector. Since beginning his career in 2000 within established SRA and CLC-regulated conveyancing solicitor firms, Andrew has overseen the legal journeys of more than 75,000 clients.
He is the self-published author of the first-time buyer guide: How to Buy a House Without Killing Anyone, and a frequent contributor to mainstream UK media on legislative updates, property law, first-time buyer guides, conveyancing best practices, and stamp duty changes. Andrew specialises in resolving complex title issues, property conflict disputes, and property tax options, streamlining the enquiry process to reduce transaction times and maintaining a client-friendly focus.
Amanda Ambler is a highly accomplished conveyancing specialist with over 15 years of dedicated experience across residential property law, legal compliance, and practice management. Having held senior roles, including Head of Legal Practice and Head of Conveyancing at established UK law firms, Amanda possesses a profound, hands-on understanding of the technical intricacies of the property market.
As the designated Legal Content Reviewer for SAM Conveyancing, Amanda ensures that every guide, legal update, and resource published meets the absolute highest standards of accuracy, regulatory compliance, and factual integrity. Her rigorous review process guarantees that complex property legislation and industry processes are communicated clearly, transparently, and safely for home buyers and sellers alike.
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