Lease Extension Process

The lease extension process (or leasehold extension process) involves you negotiating as a leaseholder with the person who owns the freehold of your flat (or house) to extend the number of years left on your lease, thus increasing its value.

The formal process, described below, if it is carried out successfully, results in you gaining 90 more years on your lease and having no further ground rent to pay for the length of the extended lease. The procedure, dictated by legal statute, typically lasts a few months.

This article details the step-by-step process to extend your lease formally under the Leasehold Reform Act 1993. We have also included a breakdown of all of the costs you'll likely have to pay on top of the premium to the freeholder.

Click to navigate to our Lease Extension Process Infographic

We have a specialist lease extension team of solicitors and surveyors and we provide:

Fixed Fee, No Sale No Fee and Unbeatable Value Solicitors.


Why should you extend your property's lease?

Pros for extending your lease

  • You increase the value of your property
By extending your lease by 90 years, you increase your property's value because if you want to sell up, the person who buys it will have that much longer to live in it - as you will - or sell it on in turn at a higher price. It also means that you're more likely to be able to pass on an asset to other family members to inherit.

  • You no longer have to pay ground rent
Under the formal lease extension route, once you extend your lease by the statutory 90 years, then the ground rent reduces down to a peppercorn rent (you pay no ground rent).

  • You can remortgage your property
The shorter your lease is, the less likely mortgage lenders are to loan money against your property (typically, they won't lend if there's less than 70 years remaining on the lease term). By adding 90 years to your lease, this vastly increases your property's remortgage ability.

Cons for extending your lease

  • Cost of the leasehold extension process
There is considerable expense in completing the process, the largest being the sum you'll have to pay to the freeholder to compensate them for your extended lease - this is called the premium. You also have to pay for a surveyor to conduct a leasehold valuation, a solicitor to handle the action and the ensuing conveyancing and - most notably - you'll have to pay for your freeholders' 'reasonable costs', which means you'll be paying for their legal and surveying expenses also. These matters are examined in our Lease Extension Cost article.

  • You don't become a freeholder
However long a lease lasts for, ultimately it is just a form of renting in that you have a landlord/freeholder. You do not, by extending a lease, gain greater legal control of a building and you'll still have to pay service charges etc.

  • You may have to go as far as a Leasehold Valuation Tribunal (LVT)
Should this happen, the process becomes more expensive. However, at this point you no longer have to pay your landlord's reasonable costs and because they have to pay for their own representation, this may dissuade them from taking matters this far without agreement.

Lease Extension Process

The Leasehold Reform Housing and Urban Development Act 1993 (as amended by the Commonhold and Leasehold Reform Act 2002) allows Qualifying leaseholders to require the freeholder to allow the extension of any lease by a fixed term of 90 years and cancelling ground rent.

If the correct conditions are met, a freeholder cannot refuse to negotiate with you as a leaseholder regarding how much they will sell you the lease extension for.

  • 1Check your eligibility to extend your lease

  • The lease must have been a long lease when granted (of more than 21 years); and
  • You must have owned your property for at least 2 years*

*(If you own a shared ownership property, then the statutory time does not start until you staircase to 100%. For example, if in 2016 you staircase to 100% then you’ll have to wait until 2018 before you can start the formal lease extension process, however you may be able to extend your lease informally).

Important: Even if these 2 criteria are fulfilled, you still cannot go ahead with your application if:

  • the landlord is a charitable housing trust and the flat is provided as part of the charity’s functions; or
  • it is a business or commercial lease.

It is critical for you to have sufficient finance not only to pay the freeholder's premium but also to cover all costs, including the freeholder's, not least because you are expected to put forward a deposit at the point when you serve your Tenant's Notice.

You must also find out who your freeholder is so you can serve them with your notice correctly. This is normally your landlord, however this isn't always the case. You can find this information out from the Land Registry. If your freeholder cannot be located, then you can apply for a Vesting Order (click on the link to find out more).

  • 2Get a Leasehold Valuation
You need to instruct a valuer and a solicitor to help you prepare and serve the Tenant's Notice.

The valuer’s purpose is:

  • to ensure you have an idea of the potential premium in best and worst case situations;
  • to advise what the offer in the Tenant's Notice should be;
  • to frame the response should the landlord give a Section 45 Counter-Notice;
  • to help negotiate and agree the freeholder’s final price;
  • to provide advice on the state of the structure of the property, what its repair condition is and how this will affect future service charges etc.

Tip: you should ensure that your advisers have experience of lease extension rules and the process involved because the subject is complex and mistakes can prove costly and could even derail the action. Both surveyor and solicitor ensure that your application and evidence are less likely to have faults.


Assessing the lease extension premium price

You should get a RICS valuer or surveyor to provide a Lease Extension Valuation before you start the action. This is where experience counts most: your valuer should have a feel for both yours and your freeholder’s perspective, ideally have local experience and anticipate claim and counter-claim.

It is also most important for the valuer to factor in your liability for the landlord’s reasonable costs and the legal and valuation costs into their estimated price of the premium.

To get some idea about how much your premium might cost, please read Lease Extension Premium

  • 3Serving the Tenant's Notice (section 42 Notice)

This triggers off the statutory process and from the date the landlord receives it, you become liable for the landlord's reasonable costs. Therefore the notice must be complete and without inaccuracies because even though you can apply to the county court to correct them, it will add a further cost to the process. An incomplete notice can be thrown out as invalid.

Your solicitor registers the notice with the Land Registry to ensure that even if the freeholder sells the building to another freeholder, the new freeholder still has to respond in the prescribed way to the notice. The Land Registry charge £20 to register the section 42 notice on the leasehold title.

The valuation date, corresponds to the date the notice is served. This date is when many of the variables affecting the premium price are set, such as the years left on the lease.

What is in the Initial Tenant's Notice?

The Tenant's Notice must include the following otherwise it can be ruled invalid:

  • Details of the lease including its date of commencement and its terms.
  • The proposed price for the lease extension (the premium).
  • Any terms that you propose for the new lease, if different from the present ones.
  • Your name and address.
  • Your signature.
  • The date the freeholder has to serve the Section 45 Counter-Notice by.

What happens after the notice is served?

After the landlord has received the Initial Notice, they have 21 days to request evidence of your right to a formal lease extension. If requested, you then have 21 days to return this information. The landlord also has the right to inspect your flat to carry out a valuation subject to 3 days notice in writing.

You must ensure that your solicitor has all the relevant information and documents to meet the time limit otherwise the Tenant's Notice will be deemed withdrawn. You will not only have to pay costs to the landlord but you won't be able to serve a new notice for 12 months.

As soon as you have served the notice, your landlord can oblige you to pay a deposit, valued at 10% of your proposed premium price or £250, whichever is greater.

Landlord's Section 45 Counter-Notice

The landlord has to serve a Section 45 Counter-Notice by the date specified in the Initial Notice. Their notice must either:

  • Agree to your lease extension request and accept your terms or propose alternative terms; or
  • Not agree to your requests, giving reasons for the court to determine.

In most real-world situations, assuming you have taken proper legal advice and assembled the correct evidence, the freeholder will agree to extend your lease (although they may try and vary the terms). It is highly unlikely that a freeholder will be prepared to take the matter to the Leasehold Valuation Tribunal (see below) because if it goes this far, they will have to pay all their own costs.

If you and the freeholder cannot agree on the price two months after the Section 45 Counter-Notice is served, then either of you can apply to the Leasehold Valuation Tribunal for an independent determination. This has to be done within 6 months of receipt of the Section 45 Counter-Notice being served.

If the landlord fails to serve a Counter-Notice by the specified date, you can apply to the county court for a Vesting Order (click on the link to find out more). If this is granted, you can extend your lease according to the terms stated in your Tenant's Notice terms, including the premium proposed. You have to do this within 6 months of the date on which you should have received the Counter-Notice.

  • 4Extending the lease

The final stage in the process is to handle the conveyancing which accompanies the extension of your lease. You will need specialist lease extension solicitors to handle this for you (which you should have in place at the point of serving the notice).

The end result will be that on the day of completion, your solicitor transfers the premium required to extend the lease to the freeholder's solicitors and they confirm its receipt. Post-completion, your solicitor registers the new lease with the land registry.

How much does it cost to extend your lease?

Lease Extension
(Estimated costs)

Lease Extension
(Estimated costs)

RICS Lease Valuation

£600 Inc VAT

£600 Inc VAT

Section 42 notice legal fees

£600 INC VAT

Lease extension legal fees

Other costs include:
Stamp Duty
You don’t have to tell HMRC or pay SDLT when
you buy a new or assigned lease of 7 years or more,
as long as the premium is less than £40,000 and the
annual rent is less than £1,000

Land Registration
Based on the property value.
Read about the land registration charge

Online Identification (per Person)
Read what ID does your solicitor need

£8 £8
Official Copy of Register & Title Plan (per title)

£6 £6
Official Copy of Lease

£3 £3
Bankruptcy and OS1 priority land registry fee

£10 £10
Registration of the Section 42 notice at the
Land Registry
(formal route only)

N/a £20
Additional solicitor’s legal fee for
Deed of substituted security
(only if mortgage)

£120 INC VAT £120 INC VAT

Is there stamp duty to pay when extending your lease?

You do have to pay stamp duty when:

  • you extend your lease of 7 years or more and pay a premium/consideration of more than £40,000 to the Freeholder.

You do not have to pay stamp duty land tax on your lease extension when:

  • you buy a new or assigned lease of 7 years or more, as long as the premium is less than £40,000 and the annual rent is less than £1,000; or
  • you assign or surrender a residential or non-residential lease (granted for 7 years or more) and the chargeable consideration is less than £40,000

Any questions? Call 0333 344 3234 (local call charges apply)

Lease Extension Process Infographic


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