If you wish to start a lease extension on your property that you are selling to enable the buyer to complete the lease extension, this is possible via a legal mechanism known as assigning the benefit of a Section 42 Notice.
The assignment of the benefit of the Section 42 Notice is undertaken by both the solicitors handling your sale and your buyer’s solicitors. It is very important that both sides’ solicitors understand this process and its legal execution and that they carefully include the necessary provisions in your sales contract.
Reasons To Assign The Benefit of a Section 42 Notice
Although the “two-year ownership rule” was abolished on January 31st 2025 meaning a new owner of the property no longer needs to wait until they have owned the property for two years to start a statutory lease extension and can theoretically serve their own notice immediately after purchase, there are two main reasons the buyer may not be able to wait until they own the property to start the process and secure a mortgage on the property to buy it;
1. The “Registration Gap”: It can take HM Land Registry many months to register the buyer as the new owner. Until they are registered, they cannot serve their own notice. Assigning your notice bridges this gap.
Note: It is possible to reduce the ‘registration gap’ by making an application to HM Land Registry to expedite the registration of ownership. To do this, the new owner will need to provide the Land Registry with evidence of the reason for the expedition. If you have recently bought a property, our solicitors can assist with providing evidence of your lease extension to make the application to expedite registration of your ownership to reduce the ‘registration gap’.
2. Valuation Protection: If the lease is close to dropping below 80 years (e.g., 80 years and 2 months), assigning your notice freezes the current lease from the date the S42 Notice is served and before the sale completes, preventing the lease from becoming significantly more expensive (due to “marriage value”).
The Process
It is not possible to simply hand over the right; it must be undertaken by the solicitors handling the sale of the property, agreed by both the buyer and the seller, and then contracted through each party’s solicitors (handling the sale) through a strict statutory process. If you get the timing wrong, the notice becomes invalid, and the buyer may have to restart (and potentially pay more).
1. The Seller Starts A Statutory Lease Extension
- Our specialist Surveyors will undertake the specialist valuation for the purpose of the lease extension to determine the “premium” (the price) to offer the freeholder.
- Our specialist Solicitors prepare and draft the S42 Notice
- The S42 notice is served upon your instruction before you complete the sale
2. The Sales Contract
The seller and buyer agree on the terms of the sale, with both parties’ solicitors handling the sale, including the agreement and associated timings and costs for the seller assigning and granting a benefit to the buyer at completion of the sale. To facilitate this, the seller will need to ensure that the S42 notice is served in good time before the completion date and that the solicitors handling the sale carefully insert the conditions to assign the benefit of the S42 notice and the lease extension as conditions of the sale.
3. The Assignment To The New Owner
On the day of completion, the seller and the buyer sign a Deed of Assignment. This document formally transfers the rights of the Section 42 Notice to the buyer. It is critical that the solicitors handling your sale and your buyers’ solicitors understand that the correct legal process to execute the Deed of Assignment, which must be completed simultaneously with the property transfer. If you sell the flat (transfer the title) but forget to sign the Deed of Assignment until the next day, the notice is deemed “withdrawn” (cancelled) by law.
4. Notification to the Landlord/Freeholder
The buyer’s solicitor must formally notify the freeholder that the claim has been assigned to the new owner, who then completes the lease extension with their solicitors.
Talk with a Lease Extension Specialist Today
We have helped thousands of clients who have sold their property by assigning the benefit of the S42 Notice to their buyer so that the buyer can then complete the lease extension.
To find out more about how we can help, speak to a member of our Client Service team on 0800 098 2770, complete our Contact Form, or email us at [email protected].
