Selling a Flat With a Lease Extension Claim Running
Lower Mortlake Road, Richmond TW9. Eighty-one years unexpired, a claim already well advanced, and a buyer who would inherit it — with a retention to cover the cost.
At a glance
- Service
- Sale of a leasehold flat with assignment of a statutory lease extension claim
- Location
- Lower Mortlake Road, Richmond upon Thames, TW9
- Position at sale
- 81 years unexpired, with a claim well advanced and the premium already agreed with the landlord
- Outcome
- The claim was assigned to the buyer on completion by deed of assignment, with the seller agreeing a retention, subject to a cap, to cover the cost of the renewal
Why sell mid-claim at all
A lease extension claim takes months. A sale can arrive at any point in them, and the seller then has three options.
Withdraw the claim and sell with a short lease, accepting whatever discount the market applies. Complete the extension first and delay the sale until it is done. Or sell with the claim running and pass its benefit to the buyer.
At 81 years unexpired, the first option was unattractive: the lease was close enough to the 80-year threshold that a buyer would price the risk. The second meant holding a sale together for months with no certainty the buyer would wait.
So the claim was assigned.
Being straight about assignments
We prepare deeds of assignment regularly and we are careful about recommending them, because they are less necessary than they used to be and buyers are frequently wary of them.
The old reason for assigning was that a buyer had to own a flat for two years before they could claim in their own right, so inheriting the seller’s claim was the only way to avoid a long wait. That requirement has been abolished. A buyer can now serve their own notice straight away, which removes much of the historic case for assignment.
What is left is a narrower but real advantage: the seller’s claim already exists, its valuation date is already fixed, and where the premium has been agreed the buyer takes a known figure rather than starting a fresh negotiation at a later valuation date. On a lease near 80 years, that fixed valuation date is worth having.
Against it, the buyer inherits deadlines they did not set and obligations under a claim they did not bring. Some buyers — and some buyers’ solicitors — would simply rather start again.
Here the claim was well advanced and the premium agreed, which is the situation in which assignment makes most sense.
The practical point. An assignment is worth doing when the claim is advanced and the premium is settled. Assigning a claim that has barely started usually hands the buyer complication without benefit.
The retention, and why the cap mattered
The commercial question on any assignment is who pays for the extension. The seller has agreed a premium but will not be there to pay it; the buyer inherits the claim and the bill.
Here the seller agreed a retention from the sale proceeds to cover the cost of the renewal, subject to a cap.
The cap is the part worth noticing. An uncapped retention leaves a seller exposed to costs they cannot control after completion, incurred by a buyer with no particular incentive to keep them down. A cap fixes the seller’s exposure at a known figure while still giving the buyer the substance of what they negotiated. Both sides know where they stand on the day of completion, which is the point of the exercise.
Getting that mechanism drafted properly — what the retention covers, who holds it, when it is released, what happens to any balance — is most of the legal work on a sale of this kind.
When this applies to you
Selling with a short lease
If your lease is near or below 80 years and you are thinking of selling, take advice before you market it. Serving a notice first can protect your position and give a buyer a fixed valuation date, but only if the claim is far enough along by exchange to be worth assigning.
If it is not, the honest answer is often to complete the extension first or to price the flat accordingly. We would rather say that than draft an assignment nobody benefits from.
Common questions
Can I sell my flat while a lease extension claim is running?
Yes. The benefit of the claim can be assigned to your buyer by deed of assignment, completed at the same time as the sale. Alternatively the claim can be withdrawn, or completed before you sell.
Does my buyer have to own the flat for two years before claiming?
No. That requirement has been abolished, so a buyer can serve their own notice immediately. It is the main reason assignments are less necessary than they once were.
Who pays the premium if the claim is assigned?
It is negotiated. Here the seller agreed a retention from the sale proceeds, capped at an agreed figure, to cover the cost of the renewal the buyer would complete.
What does a deed of assignment cost?
From £950 plus VAT, in addition to the conveyancing fees for the sale itself.
Client names are not used in our case studies. Properties are identified by road, block and postcode only. Every matter turns on its own facts, and outcomes described here are not a prediction of what will happen in yours.