If you have received a Section 42 Notice, understanding what steps to take can be confusing.
Freeholders often ask:
- What a Section 42 Notice is
- How a Section 42 Notice should be responded to
- Whether a Section 42 Notice can be refused
In this article, Leasehold Specialist Richard Ramshaw answers all of these questions and more…
What is a Section 42 Notice?
A Section 42 notice is delivered by the owner of a residential flat (a leaseholder) to force the freeholder to grant a lease extension. Leaseholders can do this under the Leasehold Reform, Housing & Urban Development Act 1993 (“the 1993 Act”).
How to respond to a Section 42 Notice?
It is important to obtain legal advice as soon as possible if you have received a Section 42 Notice. The timetable is strict and short and cannot be ignored!
The matter will not simply go away by ignoring it. In fact, a freeholder ignoring it could potentially be very detrimental to them.
If you are entitled to be paid a premium for the lease extension (which will usually be the case if you are the freeholder or a head leaseholder), you will also need specialist valuation advice.
Both a specialist lawyer and valuer will need to be instructed as quickly as possible so that the necessary steps can be taken to prepare and serve a Section 45 Counter-Notice in response.
Our specialist lawyers at Frettens can assist with all of this and can arrange for one of our preferred panel of specialist valuers to assist you on the valuation/premium side of things.
How long does a landlord have to respond to a Section 42 Notice?
The deadline to respond with a counter-proposal (known as a Section 45 Counter-Notice) will be specified in the Section 42 Notice. The leaseholder must allow a freeholder a minimum of two months from the date of the Section 42 Notice.
During that time, the freeholder’s valuer will need to arrange an inspection of the flat in order to prepare their valuation report and advise the freeholder on the likely premium payable.
The freeholder’s lawyer also needs to obtain evidence of the leaseholder’s right to the lease extension and to prepare the Counter-Notice ready to be served before the deadline.
If no Counter-Notice is served before the deadline, the leaseholder is entitled to apply to the Court to forcibly acquire the lease extension based on their offer figure contained in the Section 42 Notice.
As mentioned above, this offer figure will usually be lower than is truly payable for the extension, so it is in the freeholder’s best interests to counter-propose their own figure to protect their ability to negotiate a more accurate price.
Can I refuse a Section 42 Notice?
Provided the Section 42 Notice is valid, the leaseholder meets the criteria set in the 1993 Act and there is nothing preventing the leaseholder from serving a Section 42 Notice, it cannot be refused.
Do I have to pay my legal and valuation fees if I receive a Section 42 Notice ?
Once a Section 42 Notice has been given to the freeholder, the leaseholder automatically becomes liable to pay the freeholder’s reasonable legal and valuation fees.
As we are used to dealing with such lease extensions on behalf of freeholders, Frettens will defer payment of their legal fees acting for freeholders until completion so that a freeholder doesn’t have to cover their legal bill in the meantime. Such payment arrangement is strictly limited to the remit of the lease extension.
Specialist Leasehold Experts
If you have received a Section 42 Notice and would like to speak to an expert, you can speak to a member of our team by calling 01202 499255, or by filling out the form.
We offer all new clients a free initial chat.
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