How does the First-tier Tribunal work?

12/04/2019
624
7 min read
The First-tier Property Tribunal (FTT), First Tier Property Chamber, or Leasehold Valuation Tribunal, is the very last stop on the statutory/formal process for lease extension, set out within the Leasehold Reform Act. It is the legal body which settles disputes over the leasehold value, when freeholders and leaseholders are negotiating the premium for extending the leasehold.

As a leaseholder taking the formal route, you'll have served a Section 42 notice to your freeholder. You may have received a counter offer in a Section 45 notice. You've been trying to agree what you'll pay (called the premium) for your statutory 90-year addition to your lease term and ground rent with your freeholder. You might even have paid for a RICS valuer's time (by the hour) to help you negotiate but, for whatever reason, you and your freeholder haven't been able to meet on the premium and terms.

From the outset you should note 3 highly important points:

    1
    Formal lease extensions rarely get as far as application to the tribunal and it is even less common for a tribunal appointment to actually occur.

    2
    You'd only ever consider applying to the FTT as a leaseholder (it's doubtful that your freeholder ever would, even though they have the right to) if the difference between the premium you're offering and the one your freeholder has proposed in answer is £10,000 or more mainly because of the costs involved.

    3
    Your freeholder will normally want to settle before the possibility of being summoned to the FTT arises because they'll have to pay their own costs. It is extremely unlikely that the tribunal will make an award for costs in a lease extension case.


Click here or scroll down to see our diagram which illustrates the lease extension process route to the Tribunal.


This article examines the following matters:


Can't agree your lease extension premium with freeholder?

Our expert property lawyers and RICS surveyors can help with your formal lease extension valuation, negotiation and conveyancing, as well as taking a case to the First-tier Property Tribunal if required. We'll always aim for the most prompt and cost-effective resolution for you.

Lease Extension Solicitors – RICS Lease Extension Valuers – Experts in First-tier Property Tribunal cases


    1

    What is the First-tier Property Tribunal and what does it consist of?

The Tribunal is part of the Her Majesty’s Courts and Tribunals Service. Each Tribunal usually consists of three members: a lawyer, who is often the chairman, a valuer and a lay person. The Tribunal is entirely independent and impartial in its approach. There are five regionally based Tribunal offices (London, Northern, Midland, Eastern and Southern).


    2

    What do you have to do to take your lease extension case to the tribunal?

As discussed in our previous article Can't agree lease extension terms with your freeholder: what happens next?, you can only take a case to the FTT when 2 months have elapsed after you've received your Section 45 Landlord's Counter Notice, in which your Freeholder has agreed to your right to a lease extension but not your premium/terms.

You must, however, make your application within the next 4 months (after the 2 month elapsed period). You would normally (and are well advised to) instruct your solicitor to prepare your case for the tribunal. They will inspect all the documents and evidence of relevance up to that point, including:
  • Your RICS Leasehold Valuation (which states a financial range within which the premium should fall)
  • Your Section 42 (Tenant's) Notice (which critically includes your premium offered)
  • Details of any other related correspondence with your landlord freeholder
They then collate these and include them in the required application they make to the tribunal.

    3

    What are the actual costs of the tribunal?

  • £100 application fee.
  • £200 hearing fee (if this is required).
Your solicitor makes these payments on your behalf and keeps you briefed on the progress of your application. If it goes this far, they'll inform you of what date your hearing is booked for and where the tribunal will be held.

As previously stated, though your solicitor makes the application to the tribunal it is highly likely that you won't actually have a hearing or have to pay for one because your freeholder will settle with you without requiring one to avoid the costs involved.

    4

    Do you have to be represented by a barrister, solicitor or valuer at the tribunal?

Proceedings at the tribunal are semi-formal, so neither you nor your freeholder/landlord has to be represented by a barrister, solicitor or valuer. However, lease extension is highly technical. We strongly advise that you are represented by a barrister or solicitor, not least because your freeholder is likely to have legal or professional representation of their own.

    5

    When will you hear the tribunal's decision regarding your premium?

Most often you will be told at the hearing itself. You and your freeholder will receive written notification of the decision within 6 weeks along with reasons for the decision.

    6

    What happens after the tribunal?

You have 28 days to make an appeal against the leasehold valuation tribunal determination on your premium, which then becomes final. Appeals must be made to the Lands Tribunal (Upper Chamber) but only with the leave of the tribunal (unless the case involves huge sums of money, which is extremely unlikely for a residential leasehold extension, an appeal would be an extremely rare event).

After the Tribunal decision is final, your landlord must provide their draft lease within 14 days. You and your landlord must enter into the new lease within 2 months of the decision becoming final; if this doesn't happen, you have to apply to court within a further 2 months to force your landlord to meet their obligations.

    7

    What is the final lease extension conveyancing process?

Your solicitor:
  • Drafts the new lease

    - once the premium has been agreed between you and the freeholder, the freeholder's solicitor drafts a new or variation to the existing lease and sends through to the leaseholder's solicitor. This process can take anywhere between a week to a month so it is important you chase the freeholder's solicitor.
  • Reviews the new lease

    - the leaseholder's solicitor reviews the new/varied lease including the demise, terms, covenants and third party's rights are correct and in line what has been agreed.
  • Signs the new/varied lease

    - the leaseholder's solicitor provides the lease for signing to the leaseholder. This is signed as a deed and requires a witness. Once signed the lease is sent back to the leaseholder's solicitor.
  • Completion

    - a completion date is set, that normally ties in with a remortgage or sale (if this is how the premium is being funded). On the day of completion the leaseholder's solicitor sends across the premium for the new lease and the freeholder's professional fees to the freeholder's solicitor and upon receipt of this they confirm completion.
  • Post completion

    - after completion the leaseholder's solicitor pays any stamp duty, settles any ground rent or service charges due and then registers the new lease at the Land Registry.


Can't agree your lease extension premium with freeholder?

Our expert property lawyers and RICS surveyors can help you resolve your formal lease extension negotiations, from expert lease extension valuer representation to lease extension conveyancing to taking a case to the First-tier Property Tribunal if required. Great rates. We always aim for the most cost-effective and speedy resolution.

Lease Extension Solicitors – RICS Lease Extension Valuers – Experts in First-tier Property Tribunal cases
 



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