Lease Extension When Selling — Can the Buyer Take Over Your Section 42 Notice?

What Happens If You Serve Notice and Then Decide to Sell?

Extending a lease is a multi-month process. Circumstances change — you may serve a Section 42 notice and then need to sell the flat before the extension completes. The good news is that under the Leasehold Reform, Housing and Urban Development Act 1993, the benefit of a Section 42 notice can be **assigned to the buyer** as part of the conveyancing process.

This is a significant and often under-appreciated right. It means that selling mid-extension does not necessarily mean losing the work and costs you have already incurred.

How the Assignment Works

Section 42(7) of the 1993 Act provides that the benefit of the tenant's notice is annexed to and runs with the leasehold interest. This means that when you assign (transfer) the leasehold — i.e., when you sell the flat — the notice automatically passes to the buyer. They effectively step into your shoes and continue the extension process from the point it had reached.

The notice does not need to be separately transferred or novated. It passes with the title. However, both parties (seller and buyer) need to be aware of this and it must be handled correctly in the conveyancing documentation.

What the Buyer Gets

The buyer inherits:

• The existing Section 42 notice with the proposed premium and terms as originally served
• Any negotiations that have already taken place, including a counter-notice from the freeholder
• The right to apply to the First-tier Tribunal if premium negotiations are unresolved

The buyer does **not** get any binding agreement on premium — if negotiations have not concluded, they continue (and the buyer takes on the risk and potential tribunal cost).

Impact on the Sale Price

The pending lease extension affects the valuation:

• If the lease is short (below 85 years), a buyer will pay less for the flat in its current form than for the same flat with an extended lease
• A pending Section 42 notice has some value because it fixes the process and removes the two-year ownership requirement issue for the buyer
• If the premium has been agreed with the freeholder but not yet completed, the flat can effectively be marketed as having the extended lease, priced accordingly

In practice, many sellers either complete the extension before listing the property (for maximum sale price and to avoid complexity) or negotiate with the buyer to split the premium in some form.

Practical Steps for Sellers

1. Inform your solicitor as soon as you decide to sell that there is a pending Section 42 notice in place

2. Obtain an up-to-date position statement from your surveyor — what stage are negotiations at and what is the likely premium range?

3. Decide whether to complete the extension before exchange (stronger position) or to assign the notice to the buyer

4. Disclose the notice fully in the pre-contract information pack (TA6 and leasehold information form)

Practical Steps for Buyers

If you are buying a flat where a Section 42 notice is in progress:

1. Obtain full details of the notice, any counter-notice, and all correspondence between the parties' surveyors

2. Instruct your own RICS surveyor to advise on whether the proposed premium is reasonable

3. Consider whether the lease extension process and its associated costs and timelines affect the price you are willing to pay

4. Ensure your mortgage lender is aware — some lenders require the extension to complete before they will lend

Estimate the Costs You Are Taking On

Use our [Lease Extension Calculator](/lease-extension-calculator) to estimate the likely premium for the remaining extension process. This is essential information when negotiating the purchase price of a flat with a pending notice.