The Tribunal Process on a Statutory Lease Extension

When parties to a statutory lease extension are unable to agree on the final terms there is a process in place whereby a final decision can be given by the First-Tier Tribunal (Property Chamber).  This article provides some further information about how that process works.

What is the Tribunal and how does it work?

The Tribunal are part of the His Majesty’s Courts and Tribunals Service. There are usually three members in each tribunal:

• a lawyer, who is often the chairman;
• a valuer; and
• a layperson (someone without specialised knowledge of the matter being decided).

There are five regionally based Tribunal offices (London, Northern, Midland, Eastern and Southern).

The Tribunal is completely independent and impartial and is the legal body which settles disputes over the leasehold value, when freeholders and leaseholders are negotiating the premium for extending the lease.

When would you make an application to the Tribunal?

On a statutory lease extension, if, after the landlord’s counter-notice is served, you and the landlord cannot agree on the price or other aspects of the new lease, there is a negotiation period of up to six months.  After the first two months of the negotiation period either the tenant or the landlord can apply to the tribunal for an independent decision on the issues in dispute.

You must do this no sooner than two months from, but within six months of, the date the counter-notice is served. The fee for applying to the tribunal is currently £100, and the hearing fee once you receive notice of a hearing date is £200.

Will there be a final hearing?

In the majority of cases, matters will not reach a final hearing and it is often possible for the parties to reach agreement before the date of the final hearing.  The Tribunal gives the parties time (often an initial stay in proceedings) to try to reach agreement between them but inevitably there are cases that require external input to reach a decision.

What happens at the hearing?

Proceedings at the tribunal are semi-formal, so neither you nor your freeholder/landlord has to be represented by a barrister, solicitor or valuer. However, a lease extension is highly technical and we strongly advise you are represented by a professional, not least because your freeholder is likely to have legal or professional representation of their own.

Most often you will be told of the decision at the hearing itself. You and your freeholder will receive written notification of the decision within 6 weeks along with reasons for the decision.

In certain circumstances, the tribunal may order your landlord to repay all or part of your application or hearing fees (or both). During or after the hearing, you can ask the tribunal for an order, but this is entirely the tribunal’s decision.

You can also apply to the tribunal to award costs (you can do this by asking them at the hearing or you can apply in writing). at any time during the proceedings, but you must do this within 28 days after the date the tribunal sends you a notice of their decision or notice of permission to end the proceedings.

The Tribunal may decide to make a decision based on the papers submitted to it (without a hearing) or have a remote hearing via video call.

What happens after the hearing?

The tribunal’s decision becomes final after 28 days. If you do not agree with the tribunal’s decision, you can appeal to the Upper Tribunal (Lands Chamber) before the decision becomes final, but only if you have the tribunal’s permission.

After the tribunal’s decision becomes final, your landlord must provide their draft lease within 14 days. The parties have two months from the date of the decision becoming final to enter into the new lease. If the parties do not enter into the new lease within two months of the tribunal’s decision becoming final, the parties have a further two months within which either party may apply to the court to order the other to meet its obligations.