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News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
The existence of a head-lease in relation to a residential block of flats has considerable significance in a claim for a lease extension. As well as arguments to the value of the head-lessee’s interest, conveyancing issues are likely. When a sub-lessee claims a lease extension, terms will be needed for provision of services after the termination of the head-lease. When a head-lessee itself claims for a particular flat, there will be a surrender of the head-lease in respect of that flat, leading to arguments about the new lease terms.
In a claim by a sub-lessee, the first question will be who the competent landlord is under s40 of the Leasehold Reform, Housing and Urban Development Act 1993. If the head-lease is for a term long enough to include the additional 90 years to be granted with the lease extension, then the head-lessee is likely to be the competent landlord, and unusual conveyancing issues will not arise. However, it is common for the head-lease to have a term only days longer than the sub-leases below. The deemed surrender and re-grant of the head-lease necessary if the grant of the extended lease is to take effect in possession does not allow for any change in terms in the head-lease, but provision will need to be made under s57 for services to be provided by the freeholder, and service charges paid by the tenant for the period after the expiry of the term of the head-lease.
A head-lessee which is a qualifying tenant can claim a lease extension (Howard de Walden Estates Ltd v Aggio) leading to the surrender and re-grant of that portion of the head-lease relating to the particular flat. The rest of the head-lease continues as before. The Act gives no guidance on how to transfer the terms of a head-lease into the lease of the flat. Lord Neuberger’s decision in Aggio suggests solutions tending to make the new lease as much like a usual long lease of a flat as possible. However there are complications. The extended lease may not include rights over common parts, since the head-lessee will retain possession of them and cannot grant rights to itself. Lord Neuberger’s suggested remedy is that a head-lessee grant any assignee of the new lease an under-lease of the flat including those rights, an additional conveyancing device.
The drafting of a new lease will require care if the head-lessee is to obtain a valuable asset and the freeholder a workable system of leases. Lord Neuberger was confident the LVT could be relied upon to ensure this outcome. However, if the competent landlord fails to give a counter-notice to a head-lessee’s claim an application under s49 could lead to a new lease on the precise terms proposed in the s42 notice. If those terms are unworkable or include in the demise non-appurtenant property, the freeholder may wish to argue that no order can be made under s49; it is not clear if such an argument could succeed. It may be this is a theoretical concern. Anecdotal evidence suggests LVTs have been able to deal with issues arising and, in practice, disputes are limited.
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Christopher Heather and Cecily Crampin are barristers at Tanfield Chambers.