7 Things You Need to Know About Negotiating a Lease Renewal

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Purchasing a flat or a house is an exciting life milestone. However, if your home is a leasehold property, extending or changing the lease can be a confusing and stressful process. Negotiating a new lease with the landlord or freeholder can be nerve-wracking and intimidating, so it is crucial to take action early and prepare thoroughly, long before the renewal date.

Rather than accepting the terms and conditions of any new or extended lease presented by the freeholder/landlord, you are within your rights to negotiate your lease until you are both happy with the final agreement. However, before you discuss terms, you will need to fully understand the wording of your lease and be well-informed and prepared for the lease renewal process.

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Understanding Your Lease

Make sure that you fully understand your lease agreement, its terminology and the main components. You may be able to extend your lease for up to 90 years for a flat, or up to 50 years on a house (if you qualify).

Parties’ Details: For identification, the full name, address, and contact information of the tenants and landlords.
Property Details: Information about property type, area, structure, size and layout, number of rooms and bathrooms, and other characteristics of the leasehold.
Rent and Deposit Details: Ground rent amount, payment cycle, due dates, protection scheme details, deductions, or anything related to payments to the landlord.
Tenancy Duration: Specific start to end dates (if any), variable or fixed-term tenancy details and notice periods.
Rights and Responsibilities: The tenant’s and landlord’s liabilities to the property, which include maintenance, usage, repairs and improvements.
Restrictions: The landlord may impose restrictions, such as standard property rules for tenants, no subletting or pets and restrictions on refurbishing.
Termination Details: Conditions that allow the landlord or tenants to terminate the agreement and the process or requirements that follow.

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7 Things To Remember During Lease Renewal Negotiations

Start Early: Last-minute calls for any negotiation are a no-go, and even more so for lease renewals. Plan ahead and start the process at least a year before the lease expires. Initiating early gives you enough time to gauge the property market in your area and seek any alternative options. Understand whether you fulfil the tenant’s renewal criteria to know your eligibility for serving the section 42 notice to your landlord.
Do Your Homework: It’s best to start your research during the early stages. Understand the market rent rates, know the condition of your property and its market value, gather data from existing lease extensions in your area and speak with other tenants and neighbours to gather as much information as possible to be fully informed before negotiation.
Highlight Your Offerings: If you are generally a good tenant and adhere to basic rules, make sure the landlord/freeholder knows this! You can also offer services like doing your own repairs or sharing costs.
Review Lease Terms: To negotiate better terms, keep a close eye on rent escalation clauses, maintenance responsibilities, lease renewal options, tenant improvement and allowances. Some lease agreements may have automatic renewals, while others require a written notice.
Be Realistic And Flexible: Although everyone wants the best possible outcome in a situation, it’s important to find a middle ground. You must clearly know what you need, whether there are alternative options and what you’re willing to compromise on; this allows more room for negotiations and making a deal and suits both the freeholder and the tenant.
Explore Alternatives: Do your research on other lease extensions in properties similar to your own to work out whether you are getting a good deal.
Seek Help If Needed: Leasehold disputes can be common and may end up at tribunal if an agreement cannot be reached. For help with mediation or applying for a tribunal, head on over to the GOV.UK website.