Lease extension- can landlord use s.61 of 1993 Act?

[S KARAN]

I am in the process of extenting my lease and freeholder finally agreed to a premium which I offered but he iserted a clause which is sec 61 (landlord right to terminate new lease)of leasehold reform, housing and urban development act 1993. This clause is not in the existing lease. Would you please advice me whether he has a right to that or not.

[jeffrey]

I am in the process of extenting my lease and freeholder finally agreed to a premium which I offered but he iserted a clause which is sec 61 (landlord right to terminate new lease)of leasehold reform, housing and urban development act 1993. This clause is not in the existing lease. Would you please advice me whether he has a right to that or not.

Yes. Section 61 applies irrespective of what lease states, but only for:
a. the final 12 months of old lease term; and
b. the final 5 years of new 90-yr. term extension.

AND L cannot use s.61 unless Court so orders (on his application, at that later time) because L seeks to demolish and reconstruct (similar to s.30(1)(f) of LTA 1954 re business tenancies). T is entitled to compensation under Schedule 14 to 1993 Act; its paragraph 5 makes compensation equal to flat's open-market value, on the assumptions set out there.

[TomMerralls]

I appreciate the problem this clause poses for leaseholders. From a practical perspective, this may very well put a would-be purchaser off. Some conveyancers may also take the view the lease is not sufficiently secure for lender's purposes. However, compensation (if the freeholder chose to exercise it's rights to bring the lease to an end) would be payable and is based upon market value of the flat. So, whilst a Landlord can exercise this right, financially, a leaseholder should not be disadvantaged.

Also, a Landlord must apply to the court to bring the lease to an end for redevelopment purposes. Something that, arguably, is rarely going to happen???

[S KARAN]

Thank you so much for your reply