Q&As

Where a lender agrees to its borrower obtaining the grant of a new extended residential lease and the existing lease is already in charge to it, can it safely rely on section 58(4) of the Leasehold Reform, Housing and Urban Development Act 1993 so that a deed of substituted security is rendered unnecessary?

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Produced in partnership with David Nicholls of Landmark Chambers
Published on LexisPSL on 13/03/2017

The following Property Q&A produced in partnership with David Nicholls of Landmark Chambers provides comprehensive and up to date legal information covering:

  • Where a lender agrees to its borrower obtaining the grant of a new extended residential lease and the existing lease is already in charge to it, can it safely rely on section 58(4) of the Leasehold Reform, Housing and Urban Development Act 1993 so that a deed of substituted security is rendered unnecessary?

Where a lender agrees to its borrower obtaining the grant of a new extended residential lease and the existing lease is already in charge to it, can it safely rely on section 58(4) of the Leasehold Reform, Housing and Urban Development Act 1993 so that a deed of substituted security is rendered unnecessary?

Where a lease is extended under the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993), there is no need for a deed of substituted security to be executed in order to protect or continue a lender’s security over the extended lease.

When the parties to a lease agree to increase the length of the term granted, this variation is treated in law as taking effect as a surrender of the lease and a grant of a new lease. This is the case even where the parties enter into a formal deed of variation.

Under the general law, one consequence of a lease being surrendered and re-granted is that the existing leasehold title is closed at HM Land Registry and a new leasehold title is opened. Another consequence is that any security over the original lease is lost. For this reason, a lender will require the borrower to obtain its consent before surrendering the lease. A lender will also require the borrower to enter into a deed of substituted security before the lender

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