A lease extension is a way to add more years to your lease which can increase its value and make selling and remortgaging easier.
When you have a lease extension, you will get a new lease that is for the term of your current lease plus 90 years and any ground rent is reduced to zero (called a ‘peppercorn rent’). If you’re a shared owner, your rent is still payable.
What are the benefits of a lease extension?
By adding more years to your lease, you can increase your property’s value and make it easier to sell or remortgage.
As your lease gets shorter, it can decrease in value and lenders are less likely to want to lend against it. All lenders have their own requirements, and some may want leases to have longer than 85 years while others may be happy with less than this. You should speak to your lender or mortgage broker to find out.
When your lease has less than 80 years left, the cost to extend it goes up considerably. So, it’s a good idea to start thinking about a lease extension before that point.
There are two routes to a lease extension – a formal route and an informal route.
Leasehold reform
There will be changes to lease extensions under the Leasehold and Freehold Reform Act 2024. There needs to be further legislation to bring in the changes, but there is the intention to reduce the cost of lease extensions, make the process easier for leaseholders and increase the term added to 990 years (up from the 90 years that are now added).
We aren’t able to tell you when changes will come in or if you should go ahead now or wait. Please get your own advice about this. Helpful information about this can be found on the Leasehold Advisory Service website.
Visit the Leasehold Advisory Service
Informal extension route
We’re happy to consider lease extension requests on an informal basis. We aren’t always able to agree, but we will tell you the reason if not.
How to apply
To get the process started, contact us to let us know you want to extend your lease using the informal route. We’ll check we’re able to offer an extension and confirm this to you.
If you can go ahead, you’ll need to pay our surveyor’s fee so we can get a valuation to establish the premium payable. This fee is non-refundable if you decide to not go ahead.
When we have the valuation report, we’ll confirm the premium and the terms of the new lease. This may include variations to your lease that we consider would be reasonable. The new lease will be for a period of the existing term of your lease plus 90 years.
Agreeing the extension
If you want to go ahead on the terms we propose, let us know and also tell us your solicitor details.
Your solicitor will be asked for a legal undertaking to confirm that they’ll pay our solicitor fees on completion. If you decide not to proceed with the extension, you’ll need to pay for our solicitor fees for the work they’ve done up to that point.
Our solicitor will draft the new lease and send it to your solicitor to check. When it’s agreed, we’ll both sign and your solicitor will lodge it at the Land Registry. On completion of the new lease, you’ll need to pay our solicitor fees, the premium for the extension and also any outstanding rent, service charges or ground rent.
Email usFormal extension route
The legal right to apply for a lease extension comes from the Leasehold Reform and Urban Development Act 1993 (as amended). You aren’t able to use the formal route if you’re a shared owner and don’t own 100% of your property.
How to apply
You will need to serve a formal notice on us – this is commonly called a Section 42 Notice. This Notice has to include specific information so you should use a solicitor or take legal advice to ensure it’s correct.
You can find useful information about the notice on the Leasehold Advisory Service website.
When we receive your Notice, it will be checked and our solicitors will respond with a formal counter-notice within the deadline given. You’ll be asked to pay a deposit of 10% of the premium you have proposed or £250 (whichever is higher) and our surveyor may be in touch to arrange access to value your property.
The counter-notice will confirm if you have the right to a lease extension and will also confirm if we accept your proposed premium and any variations you propose. If we don’t accept them, the counter-notice will set out our counter-proposals.
Agreeing the extension
If you don’t accept our counter-offer we’ll try to come to an agreement through negotiation. If we’re still not able to agree, then the matter can be referred for a decision to the Leasehold Valuation Tribunal.
If you accept our counter-offer or when we’ve come to an agreement following negotiation or Tribunal decision, our solicitors will draft the new lease. Your solicitor will act for you to check the lease and when it’s agreed we’ll both sign it. On completion of the new lease, you’ll be responsible for paying our solicitor and surveyor fees and you will also need to pay any outstanding service charges or ground rent you owe.
If you have any questions about the lease extension process, please contact us.
Estimated costs
This table is a guide for some of the costs involved in extending your lease.
Please get your own quotes to find out how much your solicitor and surveyors fees will cost.
| Activity | Estimated costs |
|---|---|
Our solicitor fee
| £1,500 plus VAT and disbursements – costs could increase if the matter becomes more complex or negotiations are protracted |
Our surveyor fee | £600 including VAT |
Premium for the new extended lease | We can’t advise until a surveyor has carried out a valuation. You can estimate it using the Lease extension calculator for flats. |