A Leaseholder and a Freeholder negotiate the Leasehold House Lease Extension Process with help from SAM Conveyancing
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Leasehold House Lease Extension Process

(Last Updated: 04/06/2024)
15 min read

The Leasehold and Freehold Reform Act 2024 was passed on the 24th May 2024, but is not yet in effect and the date for this is not yet clear. We will update our content as and when the finalised legislation is published.

Some of the expected changes include:

  • 990 year standard lease extension for houses and flats
  • Standardised format for service charge bills, for greater transparency
  • Leaseholders will no longer have to pay their freeholder’s costs when making a claim
  • Freeholders who manage their building directly must belong to a redress scheme, so leaseholders can challenge them if needed (already applies to managing agents)
  • Ban on sale of leasehold houses, except in specific circumstances and schemes
  • Fair and transparent buildings insurance handling fees
  • Removal of two year requirement before statutory extension

While the existing act abolishes ground rent on lease extension and new leases, the new act does not cap ground rent on pre-existing leases.

Leasehold house lease extension has similarities with the lease extension process for flats. However, there are key differences and there is huge importance in instructing a property lawyer with the right experience to help you achieve success as it is a niche area.

  • Conveyancing Solicitors
Not needed:
  • Lease Extension Valuation (required for flats, not houses)

Leasehold houses are still comparatively rare in the UK property market although a considerable number of houses have been built and designated as leasehold in recent years, notably - and notoriously - under the Help to Buy scheme.

As with flats you have the right both to extend your lease and to buy your house's freehold, similarly you can take a formal statutory path or an informal one to doing so. However, you should take careful advice concerning your best individual strategy: many leasehold house owners have opted to buy their freeholds rather than extend their leases. Though this is a more expensive action and there are other factors to consider as well.

Settle up your bills
Please note that you must ensure that you have paid any rent or other charges due to your landlord, no amount outstanding, otherwise your application can be legally refused out of hand.

This article considers the following:

Free initial leasehold advice

Arrange a free consultation with one of our experienced conveyancing executives on:

Lease Extension Solicitors Consultation
  • Lease extension
  • Purchasing the leasehold, freehold or share of freehold
  • Selling a leasehold property with a short lease
  • Extending the lease at the same time as you sell

We specialise in lease extensions and have RICS valuers for the premium/negotiation and solicitors for the section 42 notice and formal or informal extension.

Request a tailored quote for:
  • RICS Lease Extension Valuation or L2 Homebuyers Survey
  • Serving of the section 42 notice, or section 13 notice on the freeholder
  • Negotiation with the freeholder (with the support of your RICS valuer)
  • Completion of the legal work, including deed of variation
  • Application to Tribunal to determine the premium
  • Vesting order for absent landlords


    What legislation underpins lease extensions of lease houses?

The Leasehold Reform Act 1967 is the main piece of legislation which enabled leasehold house owners to extend their leases and/or buy their freeholds (enfranchisement).

This Act, like many however, has been amended over the years, with notable related revisions occurring within in 1993, 2002 and 2022


    What are the eligibility criteria for extending your lease on your leasehold house?

Please note that the following points concern residential property. When commercial buildings and leases are concerned there are many more factors and rules to consider.

The key criteria are as follows:
  • You have to have been the legal owner of the house lease for at least two years immediately preceding your serving notice to your freeholder.
  • The original lease granted for the house has to have been a long lease i.e. for more than 21 years.
  • You can't yourself be leasing the house to a subtenant who themselves have rights (to extend or to buy) under the original 1967 Act.
Please note that there are other, sometimes complex, eligibility criteria involved, for example your rent must be classed as low rent and the house must have a rateable value below certain prescribed limits. These mean that you are highly advised to instruct a solicitor with appropriate experience to avoid any pitfalls.

You should also note that a number of types of lease are excluded from being extended, some notable examples of which are:
  • Leases where the letting of the house is just an add-on to the letting of other land and premises.
  • Leases granted by a charitable housing trust for the purposes of its charitable functions.
  • Some shared ownership leases.
  • Leases of Crown land (even though the Crown can permit buying the freehold).
  • Some leases where your landlord is a local authority or other public body and the land is needed for development.


    What is the leasehold house lease extension process (formal and informal)?

Formal Process

This process ends with you receiving a 50-year extension to your lease for no premium payable but you have to pay some of your landlord's costs and, when the original lease expires, you'll have to pay a 'modern ground rent' which will be considerably more expensive than your existing ground rent.

1 - Form 1 Tenant's Notice
You have to serve an appropriately completed and evidenced form officially known as a Form 1 Tenant's Notice (also known as a notice of tenant's claim) under of the Leasehold Reform Act.

This has to state or provide:
  • that you're claiming an extended lease (rather than claiming to buy the freehold)
  • the name and address of the person you're serving the notice on (in most cases the freeholder)
  • whether a copy is being served on anyone else and if so, you have to provide their name and address
  • your signature (or a signed covering letter) or that of your authorised agent
  • signatures from both joint tenants if there is a joint tenancy
  • details of the property such as the address, identification evidence (title plan), the (long) lease and the date on which it was acquired, details about the rent to establish eligibility re: the rent test (mentioned above) and proof that the property's value doesn't exceed the relevant rateable value limit (also mentioned previously)
  • There are additional rules concerning whether other relevant parties must receive the notice and governing the service of the notice itself.

    Unlike the case for Section 42 leasehold extension tenants' notices (for flats), if your freeholder disputes your notice's validity, you can normally serve a second notice without any sanction/disruption to your claim.

    What if the landlord/freeholder had plans to sell the house and a right of first refusal applies?

    Once a Form 1 has been received, a landlord's Section 5 Notice regarding the planned sale of a relevant property has to refer to the fact that your notice to extend your lease has been received.

    After you've served your tenant's notice, the lease is automatically continued for 3 months after the end of the 'currency of the claim', even if the tenant's claim to buy the freehold or extend its lease is invalid or if the notice was served by someone other than the tenant.

    What is the 'currency of the claim'?

    This is the period starting on the date that you gave notice and ending on either the date your lease extension is granted or the date the notice ceases to have effect because it's been either withdrawn or set aside by the court.

    During this period, even if the original lease has run down or the landlord has served notice to quit, the lease cannot end.

    2 Continuing process and required timelines
    Now once you've served your notice, the underpinning legislation views you as having a contractual relationship with your landlord/freeholder where they have to provide you with your requested lease extension. Each step has its own timeframe to be followed - we give more tips in our article - How long does it take to extend a lease?.

    Ensuing conditions are as follows:
    • Your landlord can serve notice on you requiring you to prove your title to the lease and you have 21 days after you've been served this notice to respond.
    • If your landlord has served a Notice in Reply or hasn't served one within 2 months of receiving your claim, you can, by further communication, require the landlord to state what changes to the terms of the existing lease it will require and what other terms it will be seeking in the new lease.
      The landlord must respond to your further notice within 4 months.
    • The landlord prepares your draft new lease and, once you've received it, you must return it, with or without amendments, within 21 days; if you don't do this it's assumed that you approve of the draft.
    • After this 21-day period has expired, either you or your landlord can serve notice requiring completion of the lease extension. Completion then takes place on the first working day after a period of 4 weeks from the giving of the notice has expired.
    • If either you or your landlord doesn't fulfil your required obligations, either of you can serve a minimum of two months’ notice specifying the default and requiring it be made good before the expiry of the notice.

    3 What costs do you have to pay?
    Most importantly, you don't pay any premium for your lease extension (unlike the statutory process for a lease extension on a flat) however:
    • you have to pay your landlord's legal costs for investigating your right to extend your lease;
    • you have to pay for the costs of the new lease (but not the landlord's costs for negotiating its terms with you); and
    • you have to pay for the valuation of the extended lease.

    4 What happens when your landlord is missing or unidentifiable?
    You cannot apply for a lease extension in the way described. You must apply to the county court for a vesting order.

    Once you've applied to the court, your claim goes ahead even if your freeholder is subsequently identified. The county court has jurisdiction to make an order on such terms as it thinks fit, if it is satisfied about your eligibility to extend your lease (or buy the freehold).

    The Residential Property division of the First-tier Tribunal (Property Chamber) in England and leasehold valuation tribunals in Wales have jurisdiction to determine any rent payable up to the date of the conveyance, which you pay to the court. The court has no power to order that your costs are set off against the amount paid into court: you have to pay the entire cost of your application.

    The Formal Route:

    • Gives you a 50-year extension to your original lease (if and when completed).
    • You don't have to pay a premium for the lease extension; however
    • You do have to pay your landlord's valuation and conveyancing costs; and
    • You'll have to pay 'modern ground rent' which may be higher than the current rate
    • You can only ever extend the lease on a leasehold house (50 years) once but doing so does not interfere with your right to buy the house's freehold subsequently.

    Informal Process

    There is nothing to stop you negotiating a informal lease extension on your leasehold house with your landlord, however in essence there's no legal protections. Please read Informal Process: What are the Pros and Cons to see how the two compare in the case of lease extensions for flats.

    • Might prove quicker to complete than the formal process
    • Might prove cheaper than the formal process
    • There might be flexibility in the number of years extra you get on your lease
    • Your ground rent stays at the old rate until the pre-existing lease is up, then falls to peppercorn for the 50 year extension

    • Might be more costly than the formal process; unless you take professional advice you are operating 'in the dark'
    • No surety at all of success
    • Your new extended contract might be loaded with unfavourable clauses
    • If negotiations stall, you'll lose anything you've invested in the process up to that point


      What alternatives do you have instead of extending your house's lease?

    As mentioned a number of times, if you are eligible to get a lease extension on your leasehold house then you could buy the freehold as an alternative.

    The main attraction here is that you'll no longer have to pay any form of ground rent however it might be a much more expensive option than going for a lease extension. Additionally, you might find that the landlord/freeholder can still impose service charges on you because they might have the right to continue looking after the communal areas if they own the whole estate your house is built on.


      Ground Rent According to the Leasehold Reform Act 2022

    What follows gives some indication of the highly involved complications required for extending houses' leases; it is purely for information and illustrative purposes and should not be taken as an 'instruction manual': you are always advised to seek appropriate legal advice from a suitably qualified practitioner.

    The modern ground rent calculation depends on a number of underpinning factors such as the property passing a low rent test and falling within permitted rateable values.

    Low rent test

    A rent is considered a low rent if it is either of the following:
    • In relation to a tenancy entered into before 1 April 1990 (or on or after 1 April 1990 in pursuance of a contract made before that date) and which had a rateable value other than nil at the date of commencement of the tenancy or else at any time before 1 April 1990, an annual rent of less than two thirds of the rateable value of the property on the “appropriate day", or the first day of the term granted by the tenancy, if later.
    • In all other cases, an annual rent of £1000 or less for a property in Greater London or £250 or less for a property elsewhere. (Section 4, LRA 1967, as amended by the References to Rating (Housing) Regulations 1990 (SI 1990/434).)
    The “appropriate day" is 23 March 1965 (section 4(1)(a), LRA 1967).

    Rateable value

    To qualify for the right to a lease extension, the house must have a rateable value (or notional equivalent) below the prescribed limits.

    The rateable value limits vary, depending upon the date of the grant of the lease. In February 2012, the government announced that, subject to the results of an impact assessment, it intends to legislate to increase the value limits to take account of inflation and increases in property values since the limits were set in 1990.

    The relevant local authority will be able to confirm the rateable value of the property.

    The modern ground rent is a figure calculated from the valuation of the property (which will have had to pass the 2 tests mentioned above) however there are 2 different possible valuation methods, the original valuation basis and the special valuation basis. In what follows, much is of more relevance to buying the freehold but the modern ground rent calculation runs alongside.

    Original valuation basis

    If the house qualifies for the right to buy pursuant to section 1 of the LRA 1967, the original valuation basis will apply. Therefore, if the lease meets the original low rent test and the rateable value (or notional equivalent) of the house is below certain limits (which vary depending upon the date of grant of the lease), then the valuation will be conducted pursuant to section 9(1) of the LRA 1967.

    The original principle behind the LRA 1967 was that the landlord owned the site, but the tenant owned the house that stood on it. Therefore, the landlord would be left with a vacant site which could be let at a “modern ground rent" when the lease comes to an end and this is the interest valued for the original valuation basis.

    The original valuation basis also assumes that the tenant has exercised its right to a lease extension under the LRA 1967.

    There will be no marriage value to pay under the original valuation basis (see Marriage value).

    Therefore, the valuation can be broken down as follows:
    • The value of the landlord’s right to receive rents for the remainder of the term of the current lease.
    • The value of the landlord’s right to receive a modern ground rent for the assumed 50 year extension.
    • The value of the landlord’s reversion of the site, but not the house, at the expiry of the assumed 50 year lease extension. (Section 9(1), LRA 1967.)

    Special valuation basis

    The special valuation basis will apply if the lease exceeds the rateable value and the rent limits set out in section 1 and 4 of the LRA 1967, and the tenant is dependent on the recent amendments to the LRA 1967 in order to qualify for the right to buy (section 9(1A), LRA 1967).

    The price payable under the special valuation method is the open market value of the freehold interest (subject to the lease) of the site and the house. This is different from the original valuation basis, which values the site without the house. The price is reduced by the value of any improvements the tenant has carried out to the house and premises at its own expense (section 9(1A)(d), LRA 1967).

    Marriage value will also be payable in the following situations:
    • If the lease has an unexpired residue of 80 years or less, then the tenant has to pay half the marriage value.
    • If the unexpired residue is more than 80 years then the marriage value is deemed to be nil and none is payable.
    In some cases where the special valuation basis applies, compensation is also payable if enfranchisement lowers the value of the landlord’s other land (section 9(1A) to (1E), LRA 1967).

    Where the special valuation basis applies and the tenant is exercising the right to buy the freehold after it has already been granted an extended lease pursuant to a notice to extend given before 5 March 1986, the tenant is part of a limited class where it will be assumed that the freehold is subject to the extended lease (as opposed to being subject to a lease that expires at the end of the original term).

    For leaseholders who extend their lease informally. the ground rent will be restricted to zero on the new term, once the pre-existing lease has expired. 

    If you hold a pre-existing lease subject to the higher ground rent, you may wish to ask your freeholder about executing a deed of variation to bring your ground rent down to a reasonable level.

    Want a 50-year Lease Extension for your Leasehold House?

    Our expert property lawyers can help you with this niche area where experience counts for everything.

    Although you don't have to pay a premium for the lease extension itself, our property lawyers act for you to best ensure that the costs you have to pay to your freeholder are reasonable and that your new leasehold contract is fair.

    Get a Leasehold House Lease Extension Conveyancing Quote

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    Andrew Boast of Sam Conveyancing
    Written by:
    Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
    Caragh Bailey, Digital Marketing Manager
    Reviewed by:

    Caragh is an excellent writer in her own right as well as an accomplished copy editor for both fiction and non-fiction books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey and mortgage related articles.

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