If your freeholder is a council, you should be prepared for court. Your right to extend your lease is written in law, so your freeholder can’t say no, but the process doesn’t always go smoothly. In our cases it goes wrong in three ways: the freeholder doesn’t engage, the two sides can’t agree, or the freeholder can’t be found.
Three ways it goes wrong, and the route through each
- CommonThe overwhelmed councilWhat happens: two months of silence after your notice.The good news: your offer can be deemed accepted, as long as it’s reasonable.Route: court, within six months of the missed deadline. In one recent case the council backed down as soon as we filed.
- Most contestedThe commercial battleWhat happens: a fight over every input, such as the deferment rate or 65 m² against 70 m², or over clauses like a sinking fund.The leverage: each side pays its own tribunal costs.Route: tribunal, 2 to 6 months after the counter notice. Adds roughly a year.
- RareThe missing freeholderWhat happens: a freehold worth little decades ago was forgotten. Land Registry holds only a name and address.The money: the premium is paid into court in case they ever turn up.Route: court, tribunal, then court again. About three years in our recent case.
When your freeholder ignores your notice
You start a formal lease extension by serving a Section 42 notice, which gives your freeholder two months to respond with a counter notice. Some freeholders don’t respond at all, even though they’re legally obliged to. This happens most with councils and housing associations, because Right to Buy in the 1980s created a huge number of leasehold flats with a fixed ground rent of no more than £10 a year and a 125-year lease.
Take 1980, when the policy was introduced, and add 125 years. Those leases expire in 2105. Take off 80 years for marriage value and you arrive at 2025. Councils now have a huge number of leases dropping into marriage value and leaseholders trying to extend before that happens, and many can’t keep up with the demand, so they ignore you.
If no counter notice arrives, you have a six-month window after the counter notice deadline to apply to court. Provided you served your Section 42 notice properly, the court will step in, and the premium you offered in it can be deemed accepted as long as it’s reasonable. That could save you thousands of pounds, but filing at court is costly.
A few months ago a council in London claimed it had served a counter notice on one of our cases but had no proof of postage, no Royal Mail ID, no receipt and no note on its systems. We found nothing in our post from that period. The council wouldn’t engage unless we admitted the notice had been delivered, so we filed at court, and as soon as we filed it backed down.
When you can’t agree on the price or the terms
A lease extension has two sides, the premium and the terms of your new lease. Commercial freeholders tend to fight on price, councils and housing associations on the terms, and the more combative ones on both.
If you can’t reach agreement, you can apply to the tribunal between two and six months from your freeholder’s counter notice. An independent panel of solicitors and valuers hears both sides and makes a binding decision. It isn’t fast or cheap. A normal lease extension takes 6 to 9 months, and tribunal adds roughly a year, possibly more depending on your part of the country.
Arguing over the premium
For a commercial freeholder your lease extension is the return on their investment, so they will fight for every penny. They buy properties with higher ground rents and values, sometimes already in marriage value, so the numbers and the gap between valuations are bigger. Council premiums on Right to Buy leases are more predictable and might vary by a few hundred pounds, which usually isn’t worth a tribunal battle.
The panel doesn’t pick between two prices. The premium follows a formula set out in law, so you argue over its inputs, such as the deferment rate, the capitalisation rate and the size of your flat. If your valuer measures 65 m² and the freeholder argues 70 m², that difference could move your premium by thousands of pounds. The tribunal decides each disputed input and the calculation does the rest.
Arguing over the lease terms
Once a council adds 90 years to roughly 80 remaining, it faces around 170 years of maintaining the roof, structure and common parts with no expected future income to offset it. Some councils use the extension to insert clauses that suit them, most commonly a sinking fund.
Normally you pay for maintenance after the work is done. With a sinking fund, a council spending £3,000 a year might charge you £4,000 to build up reserves. That sounds reasonable, but the council earns the interest on the pot, not you, and you’re paying for work before you get the benefit. Over 5 to 10 years in the property the excess could add up to thousands of pounds, which you don’t get back when you sell.
Under the 1993 Act, you have a right to a new lease on the same terms as your existing one, so the council can’t make changes unilaterally, though some still try. If you can’t agree, the tribunal goes through the lease clause by clause. Each side pays its own costs, which makes tribunal an effective negotiating tool because the freeholder has to ask whether the fight is worth it. If you’re in the right, you will typically get a fair outcome, but it can take a battle to get there.
When your freeholder can’t be found
This is the rarest of the three, usually because a freehold that wasn’t worth much 20 to 40 years ago was forgotten about. HM Land Registry only holds a name and an address, and if that dates from the 1970s the person is hard to trace even if they’re still alive. Because a lease extension is a statutory right, there is still a route through, but it’s long and costly:
When the freeholder can’t be found
- Search for themSearch for the freeholder. Before a court will help, you have to show you've tried old addresses, Companies House, neighbours, previous owners, tracing agents and a public notice in the London Gazette.
- Court: vesting orderApply to court with a bundle of a couple of hundred pages of evidence. If the court is satisfied, it grants a vesting order, which lets you proceed without the freeholder.
- TribunalGo to tribunal with a proposed premium and draft lease, and the tribunal checks they're reasonable.
- Court: completeReturn to court to complete. You pay the premium into court, where it's held in case the freeholder ever turns up, and a judge or someone they authorise signs the new lease in the freeholder's place.
We recently finished a case for a client who had lived in her flat for 30 years and wanted to sell, but her freeholder was missing. The freeholder had an unusual name, and after a lot of research, emails and letters we found the original freeholders’ descendants. They confirmed their parents had owned the freehold but had died 20 years earlier, and they had no documents to prove it. If that paperwork had been kept, our client wouldn’t have waited three years going through court, tribunal and court again.
Which of these could apply to you?
If your freeholder ignores its legal obligations, that’s court. If you can’t agree on the price or the terms, that’s tribunal. If your freeholder can’t be found, that’s court, tribunal, then court. Each route ends in the same place, an extended lease. See also our guides to formal vs informal lease extensions and choosing a solicitor.
Knowing who your freeholder is gives you a good idea of which of these you’re most likely to face. Request your free lease report and in about two minutes you’ll see the years left on your lease, your ground rent and who your freeholder is, using data from HM Land Registry. We can then go through it on a free call. If your situation is simple we’ll tell you, and if it’s complicated we’ll tell you that too.
