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Section 42 Notice - What You Need to Know

08/08/2018

A Section 42 Notice (also known as the Tenant's Notice) is served on the landlord/freeholder which starts the statutory lease extension process. You can serve your own section 42 notice, however most people instruct a solicitor to do it for them. Before starting the process you should check your eligibility as you may not be eligible to formally extend your lease - click here to check your eligibility.

What's in a Section 42 Notice and is there a precedent?

The content contained within the notice is set out within the Leasehold Reform Housing and Urban Development Act 1993 Part I Chapter II Section 42 - Notice by qualifying tenant of claim to exercise right and it states the tenant's notice must:

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;

contain the following particulars, namely;

sufficient particulars of that flat to identify the property to which the claim extends,
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,

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;

specify the terms which the tenant proposes should be contained in any such lease;

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

specify the date by which the landlord must respond to the notice by serving a section 45 counter notice. The date specified in the tenant’s notice must be a date falling not less than two months after the date of the giving of the notice. It is most common to serve the date 2 months and 1 day in the future.

Serving a Section 42 Notice correctly is critical!

A conveyancing solicitor experienced in lease extensions is fully aware that a Section 42 Notice served on a landlord/freeholder must be complete and with no inaccuracies. If your landlord finds faults in the notice, they can apply to court to have it dismissed, which means not only that your application is stopped but also that you cannot make another application for 12 months.

The Tenant's Notice is a clear milestone in the lease extension process also because all matters of valuation and compensation etc. are calculated from the date it is served. In the article below we run through what the process is to serve the notice and answer frequently asked questions.

Do you need a section 42 notice?

We have specialist lease extension solicitors who can handle:

drafting and serving section 42 notice
completion of the lease extension
vesting order - failing to reply to notice or absent freeholder

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What is the section 42 process?

Get a premium valuation - unless you have agreed with your freeholder a premium to extend under the statutory route that you are happy with, then you'll need to get a RICS valuer to provide a premium for what the additional 90 years should cost.

Check you can afford the premium - lease extension premiums can be costly so make sure you can afford the premium plus the other lease extension costs. A lease extension can be paid for from:

the sale of the property;
the remortgage of the property; or
personal savings.

Instruct your solicitor - choose a lease extension specialist who will:

obtain your proof of ID, proof of address and, (is applicable) proof of funds to pay for the premium
obtain a copy of your lease
check your eligibility to formally extend your lease
obtain the freeholder's home address - click to find out what to do if you cannot locate your freeholder*
get in contact with your freeholder to confirm your intention to extend your lease using the formal process and request the freeholder's solicitor's details
draft the section 42 notice and send to you for signing - do not date the section 42 notice. It requires someone to witness your signature and needs to be sent back to your solicitor in hard copy with a 'wet ink' signature
serve the notice on the freeholder at their home address or last known address - the solicitor should serve the tenant notice using special delivery or, at your cost, courier so that the freeholder signs and acknowledges receipt of the notice
(if required) reply to the freeholder with evidence of your eligibility
receive counter-notice from freeholder and either progressing on with the lease extension, or referring the counter offer to your surveyor for their comment**
register section 42 notice at the Land Registry
you will need to pay to your solicitor the freeholder's solicitor's fees confirmed within the section 45 notice and these are held on account until completion.

* Your solicitor will charge a separate fee for obtaining a vesting order

** Your solicitor will charge a separate fee for negotiations with the freeholder's solicitor regarding the premium however you will also need to pay an additional fee to your surveyor to respond to the freeholder's surveyor.

The final stage after getting the counter offer from the freeholder agreeing to the premium is for the solicitor to review the new lease, handle completion and register the extended lease. Click here to see what happens at this final stage of extending a leasehold in more detail.

Frequently asked questions and insider tips

Can you serve a section 42 notice without a formal valuation

Unless the freeholder has already had the lease premium valued, then you should never serve a section 42 notice using your own estimate of what the premium is worth; especially if you are just using online calculators. If you do it is most likely that the freeholder will reject your offer in their counter notice causing you delays whilst the freeholder or you gets a RICS valuation (plus it gets you off on the wrong foot negotiating in the blind and could annoy the freeholder).

Click on the following link to learn more about lease extension valuations.

Download your FREE Lease Extension Process

In one simple A4 page guide - read the complete lease extension process.

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What happens after the section 42 notice is served?

The landlord has 2 months or more (depending on the time set in the notice) to reply with their section 45 counter notice. If the 'freeholder wilfully refused or neglected to' to serve their counter notice then the leaseholder can instruct their solicitor to get a vesting order from the court to enable them to proceed. Click here to read about a Vesting Order - Failing to provide a counter notice

What are the Section 42 Notice Costs?

The section 42 notice costs will vary depending on the solicitor you work with, however we have listed below the main costs to help you budget.

Legal and third party costs
Lease Extension Valuation	£500 to £1,000 INC VAT Use a qualified RICS valuer.
Leaseholder's Solicitors fee	£500 to £800 INC VAT Solicitors separate the fee for extending the lease and drafting and serving the section 42 notice. NB Further fees apply for the actual completion of the lease extension..
Freeholder's Solicitors fee	£800 to £1500 INC VAT You are liable for the Freeholder's solicitors fee.
Copy of the Lease [If available from the Land Registry]	£3
Online ID fee	£8 INC VAT (per person)
Official Copy of the Register & Title Plan	£6 (per title - leasehold and freehold)
Registration of the Section 42 notice at the Land Registry	£20

What are the Section 42 Notice time limits

21 days after the date of the notice - freeholder must confirm the leaseholder's eligibility to extend using the formal route

2 months after the date of the notice - freeholder must issue their section 45 counter notice

6 months after the date of the notice - If your landlord does not agree with your claim, they must say why in their Counter-Notice and then, at least 2 months after but not exceeding 6 months, either you or they have the right to take the matter to the First-tier Tribunal.

What costs do you have to pay first?

Once your solicitor has served the notice, you are liable to pay your landlord's 'reasonable costs', which normally include what they have to pay for their own leasehold valuation and their legal representation.

At any point after your solicitor has served the Section 42 Notice, your landlord can require you to pay a deposit of 10% of the full premium price you have proposed or £250, whichever is the greater figure.

Can I download a section 42 notice template?

The template of what to include in a section 42 notice is shown in the article above. There is a risk of using a section 42 notice template when you aren't a solicitor because if you incorrectly serve notice on your freeholder then they could refuse to allow you to amend and you would have to wait 12 months before you could serve another notice.

Assignment of a Section 42 Notice

An eligible seller can serve the section 42 notice on the freeholder and then assign the rights to extend the lease to the new buyer. Although there is no prescribed template to assign the rights to the buyer, many solicitors use a deed of assignment.