Chattertons Solicitors Banner Image
News and Events


  • Posted

To many this seems like something that you will never have to do. After all, the lease that you purchased was for a term of 99 years and so you would think that it is likely not going to expire in your lifetime.

A lease, however, does not need to reach anywhere near its expiry date before you should consider extending it. This is especially true if you are looking to sell. Many mortgage companies have requirements as to how long must be left to run on a lease term before they will lend on it. This can vary but most look for a remaining term of the length of the mortgage plus 30 years. As such, with 60-65 years left on the lease, there is already a serious need for an extension.

Some buyers and lenders are even more cautious and require up to 85 years to be left to run on the lease at the completion of the purchase.

There is also a financial reason to extend a lease early. Once there is less than 80 years left to run on a long lease, the landlord becomes entitled to receive what is called the 'marriage value' when the lease is extended. This is an amount based on the increase in value of the property with the lease extended and can increase significantly the amount that you would have to pay to extend your lease.

This all goes to show that it is rarely too soon to consider extending your lease but how do you go about it?

The simplest and most obvious method is to ask the landlord. You can contact the landlord and put forward your proposals for extending the lease. Some landlords will already have set amounts payable and set conditions to extend a lease. You will normally have to pay a premium to the landlord for extending the lease and will often also be responsible for the landlord's legal fees as well as your own. You will need to reach agreement on how much you are going to pay the landlord, how long the new lease will be and whether there are to be any changes to the terms, such as the amount of ground rent.

I have written a separate blog on ground rents and recent concerns in that area and I would recommend that you read through that if you are to contact your landlord directly as when you are extending your lease is an ideal time to address any other issues such as doubling ground rents or rents over £250.00. It is also essential to check that any proposed new lease does not fall foul of current, more stringent lender requirements, Chattertons are more than happy to look through your lease and identify any amendments that it would be prudent to make as part of the lease extension process.

Before contacting your landlord, we strongly recommended that you instruct a surveyor who specialises in lease extensions. They will be able to provide a range of premiums that would be reasonable to pay to extend your lease and these can form the basis of your negotiations with the landlord.

You may also wish to avoid being so directly involved in the process, in which case Chattertons are ideally placed to carry out the negotiations with the landlord on your behalf.

The alternative is to use the statutory method. If you have owned the property for more than 2 years then you are entitled to extend the lease. This only applies to residential leases and does NOT apply if you lease the property from a charitable housing trust which has let the property to you as part of the charity's work.

Under the Leasehold Reform, Housing and Urban Development Act 1993 ('the Act'), you are entitled to extend your lease by 90 years (so a lease with 70 years left to run becomes a 160 year lease) and for the ground rent to be reduced to a peppercorn, effectively zero.

The first step you should take if you are looking for a statutory lease extension is to instruct a surveyor. They will be able to provide you with a range of premiums that you should consider paying from low to high. This range can then provide the basis for your negotiations. The surveyor can also carry out much of the negotiation process.

This is also the time to instruct a solicitor as they will serve all of the relevant documents to ensure that the strict procedure as detailed in the Act is followed.

The procedure involves the service of notices and counter notices which contain your offer as to how much you are willing to pay to extend the lease and the landlord countering with what they require in this regard. Strict timescales apply as to when each notice must be served or responded to and missing any of these dates can end the process and require that a year be waited before the process can be started again.

If no agreement is reached then an application to a tribunal can be made and they will be the final arbiter of how much is to be paid for the lease extension.

With the timescales involved, it is essential to have your financing in place for the lease extension at an early stage, ideally before the initial notice is served as, once terms are agreed, there is a 4 month period with in which to complete. Failure to complete within this time ends the process and a further year has to pass before the process can be started again.

As you can see, the process is complicated (even if you agree terms without following the statutory route, a new lease needs to be drafted, signed and registered) and there are severe time penalties if any deadlines are missed. Chattertons are ideally placed to help you with this process and discuss the best way for you to proceed.


If you require further advice regarding this, or any other legal issue, please contact Chattertons.

Local Chattertons Office

Online Enquiry Form

Request a Callback