Why do I need to extend my lease?
A short lease can significantly devalue a property and make it almost impossible to get a mortgage or make a property difficult to sell. On the other hand, having a long lease can add thousands of pounds to the value of your property.
The rules around leasehold referred to on this page apply in England and Wales. Northern Ireland has its own rules and Scotland mostly doesn’t have leasehold.
Can I extend my lease?
Once you’ve owned your flat or maisonette for two years, you have the right (under the Leasehold Reform Housing and Urban Development Act 1993) to add a 90-year lease extension to the remaining time on your lease.
So, if you have 75 years remaining on your lease, you could extend it to 165 years. Leasehold houses are less common and extensions can only be for 50 years.
Find out the difference between leasehold and freehold in our guide.
Leasehold changes underway
Extending a lease will be made cheaper and easier under the Leasehold and Freehold Reform Act, which was passed in May 2024. And the standard lease extension term will be increased to 990 years for both flats and houses.
But not all the changes have yet come into force and there’s no set date for when this is likely to happen. This could leave leaseholders in a dilemma about what to do.
Should I extend my lease?
A lease extension can be expensive, so you need to carefully consider your options. The potential changes to leasehold rules make the timing of such a decision more complicated too.
Your decision will depend on your own situation, how long your lease has to run and when the changes will come in.
We suggest that you look at the advice on LEASE – The Leasehold Advisory Service. This is a government-funded organisation that offers independent advice for residential leaseholders and park home residents. You can book a consultation with them to discuss your options.
If you’re considering a lease extension, make sure you understand all the costs involved and that you can afford to do it without overstretching yourself.
When should I extend my lease?
It’s not known when the new changes will come in or how they’ll work.
So the cut-off date for whether you need to act now or wait for the benefits of the changes in legislation is around 80-82 years left to run on your lease.
See the LEASE guidance about waiting to extend a lease.
Under 80 years, leasehold properties start dropping in value and it becomes a lot more expensive to get a lease extension. This is because you’ll have to share the property’s ‘marriage value’ – the additional market value you’ll add to the property by extending the lease – with the leaseholder. This is on top of the normal extension costs.
How much does it cost to extend a lease?
Currently, there are lots of different factors that affect how much you’ll pay to extend your lease, including:
The property’s value
The number of years remaining on the lease
The annual ground rent
The value of any property improvements paid for by the leaseholder.
Lease extension costs include:
The premium (the amount charged for the lease extension)
Legal advice (your solicitor’s fees)
Lease extension valuation report (by a surveyor)
Your freeholder’s costs (for their legal and valuation fees)
You may have to pay stamp duty depending on the cost of the lease extension and other factors
Land Registry fees.
Because it’s somewhat subjective, you might be able to negotiate the overall cost. Your solicitor will be able to help you with this.
The new legislation may change some of the costs of lease extension to potentially make it cheaper. But although the marriage value will no longer be included, the new calculations may still allow a premium for the ground rent that will no longer be paid.
Lease renewal or extension isn’t a regular payment, like a mortgage. Use the Leasehold Advisory Service’s (LAS) lease extension calculator for flats as a guide to how much extending your lease may cost.
It’s important to note that you’ll be responsible for both your own and your landlord’s legal costs and valuation fees – whether you complete the lease extension or not.
So make sure you can afford all the various costs as they become due before you start the process of extending your lease.
How does the lease extension process work?
Check you’re eligible to apply for a lease extension.
Let the freeholder know that you’re looking to extend your lease. This will give you both time to get together all the documents you need.
Appoint a solicitor. It’s a good idea to compare costs, and only use someone who’s part of the Association of Lease Extension Practitioners (ALEP).
Appoint a valuation surveyor. Look for someone with experience in leasehold extension legislation.
Serve the freeholder with your tenant’s notice to trigger the legal procedure. From that point, you’ll be liable for the landlord’s legal/valuation costs.
Pay the deposit (if required). This will be either £250 or 10% of the lease cost that you proposed when you gave notice of your intention to extend, if more than £250.
Agree a price with your freeholder. Your solicitor will handle negotiations on your behalf.
Sign the new lease – make sure you’re aware of any new terms – and pay the extension cost.
The whole process usually takes between three and 12 months.
See the LEASE guide to leasehold extension for further details.
Do I qualify as a leaseholder?
To extend the lease on your property, you need to be a qualifying leaseholder – so you must have owned a leasehold property for two years or more. The lease must be a long lease, originally for a period of more than 21 years.
You won’t qualify if your property has a business or commercial lease, or if your landlord is a charitable housing trust. Shared ownership leases won’t qualify unless they’ve staircased to 100%.
There may also be other restrictions if your freeholder is the Crown, the National Trust or if your home is inside a cathedral precinct.
Should I buy the freehold?
It might seem a lot simpler to buy the freehold of your property, so you don’t have to worry about extending your lease. However, buying the freehold is a complicated and expensive legal process, which might not make financial sense for you.
You also need to get the majority of leaseholders within your building to agree to buy a share of the freehold. That means over half of the people who own a flat in your building.
What’s the difference between leasehold and freehold?
A leasehold property is owned for a fixed period of time under a legal agreement with a landlord. The leaseholder does not own the land.
A freehold property is when a home, including its land, is owned outright, on a permanent basis.
Find out more in our guide to leasehold vs freehold.
Do you have to own and live in the leasehold property to renew the lease?
No, you just need to own the leasehold property to get an extension – you don’t have to live there. This means you can rent the flat to someone else, but you’ll be responsible for maintaining the lease of the property.
What happens if I can’t agree a price with the freeholder?
If you can’t agree on a price after negotiating with your freeholder, you can apply to the First Tier Tribunal (Property Chamber). They handle applications and appeals relating to disputes over property and land.
The Tribunal will consider both sides and implement a deal. However, this involves extra legal costs and time, so it’s more of a last resort if you really can’t reach an agreement.
Should I buy a property with a short lease?
Properties with short leases can be tempting because they’re relatively cheap. But you need to factor in that you’ll have to extend the lease before you can get a mortgage.
You may also need to pay cash for the property, if the lease is under 60 years. Weigh up whether the asking price plus the lease extension cost really make the property a good deal. Only you can make the decision whether it’s worth it or not.
Can I get a loan to pay for my lease extension?
You might want to consider extending your mortgage to pay for a lease extension. You’ll need to have spare equity and be able to afford the increased monthly repayments, but extending your mortgage will keep all your property costs together under one loan.
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