Lease Extensions
Obviously it is always open to landlords and their leaseholders to negotiate privately
without the need for going through the process prescribed by the legislation. This is
more likely to be a ‘quick fix’ in that professional landlords will know they have the
upper hand whilst no Notice is served because they are not bound to reach any agreement
that is not to their liking.
This affects the bargaining power of the leaseholder who is likely to be offered for example
an increase back up to 99 years only at an increased ground rent. This allows the landlord
to negotiate again on the basis of an enhanced calculation for loss of future yield and the
premium he can charge is likely to be disproportionate to the number of years granted.
There may be value in this to leaseholders wanting to extend the lease term quickly prior to
marketing the property for sale. However, as service of the Notice does not preclude parties
from negotiating it is usually advantageous to leaseholders to serve Notice in any event.
