Lease extensions: The essentials to getting started

Whether you’re planning to stay in your property long-term, sell, or remortgage, extending your lease can help protect your property’s value and makes it easier to sell or refinance in the future.

Getting started:

The onboarding stage plays a critical role in ensuring your lease extension progresses efficiently. If you provide your solicitor with the required information, it ensures your instruction moves forward quickly without delay.

Your solicitor will usually ask for:

• Proof of identity, address, and source of funds (to meet anti–money laundering regulations and the law firm’s compliance obligations).
• A copy of your lease and title deeds.
• Full contact details for the freeholder and any management company or managing agent.

Once this information has been provided and all compliance requirements are satisfied, your solicitor can begin work and carry out an initial review of your title to confirm eligibility to extend your lease.

Initial briefing and background information:

You should provide your solicitor with all relevant background details, including:

• Any informal or “off-the-record” discussions with the freeholder about extending your lease and potential premiums.
• Whether you are considering the voluntary (informal) or statutory (formal) route.

This early information helps your solicitor identify potential risks, assess timescales, and provide accurate advice from the outset, ensuring you are equipped with all the necessary information before proceeding.

Understanding your options:

Before deciding whether to extend your lease, it is important to understand the two available routes and what each involves.

Voluntary (informal) lease extension:

This route allows you to negotiate directly with your freeholder without serving a formal notice under the Leasehold Reform, Housing and Urban Development Act 1993 (LRHUDA 1993). If you agree terms, solicitors will draft the new lease, advise their clients, and oversee completion once all parties are satisfied. This would typically take two to six months, depending on negotiations, third-party input and document preparation. There are several pros and cons to this route.

Pros:

• Often quicker than the statutory route.
• Potential for lower overall costs.
• A cooperative freeholder may agree more favourable terms.
• Can enhance your property’s market value.

Cons:

• The freeholder is not obliged to negotiate.
• Terms may be less favourable (e.g., shorter lease extensions).
• Ground rent is not automatically reduced to a peppercorn (£0.00).
• No fixed response time from the freeholder.
• Mortgage lender approval is required.
• No legal right of appeal if negotiations break down.

Statutory (formal) lease extension:

Under the statutory route, your solicitor serves a Section 42 Notice under the LRHUDA 1993. The freeholder must then respond with a Section 45 Counter-Notice within two months. If you cannot agree terms (such as the premium), both parties can negotiate via their valuers and solicitors. Where agreement still isn’t reached within six months of the counter-notice, the matter can be referred to the First-tier Tribunal (Property Chamber). This process typically takes four to 12 months, depending on negotiations, third-party involvement, document preparation, or Tribunal proceedings.

Pros:

• Guaranteed 90-year extension added to your existing lease term.
• Ground rent reduced to a peppercorn (£0.00).
• Provides certainty and prevents freeholder delays.
• Premium is regulated, usually resulting in fairer value.
• Protects you from unreasonable lease terms.
• Can increase your property’s market value.

Cons:

• The process is technical, and errors may invalidate the notice.
• Costs may increase if Tribunal action becomes necessary.
• Less flexibility in negotiating terms.
• Statutory deadlines can lengthen the overall process.

Costs to consider:

Premium: The sum payable to the freeholder for extending your lease.
Legal and valuation fees: You must usually cover both your own and the freeholder’s reasonable costs.
Tribunal or court fees: Only applicable if negotiations fail and the matter proceeds to a hearing.

The premium and valuation:

Before serving a notice on the freeholder or having informal discussions, it is vital to obtain a professional valuation from a surveyor who specialises in lease extensions. While online tools can provide a guide, only an experienced valuer can calculate an accurate premium and negotiate effectively on your behalf. If you submitted a Section 42 Notice with an unrealistically low offer, it may be seen as not made in good faith, which could result in a delay or invalidating your claim.

If negotiations become prolonged, your solicitor and valuer can liaise with the freeholder’s legal team to achieve a fair outcome in most instances. Professional guidance ensures your interests are protected throughout the process.

Completing the lease extension:

Once terms are agreed, the new lease is prepared by the freeholder’s solicitor and then reviewed and approved by your solicitor. The new lease will be dated and registered at HM Land Registry, and the premium costs plus associated costs are paid to the freeholder’s solicitor.

For more information on how Leathes Prior can help with lease extensions please contact us via email at info@leathesprior.co.uk or by telephone at 01603 610911 or visit the Residential Property page.