Lease Extensions

If you’re looking to extend your lease, the decision can have a significant impact on both your home’s value and your peace of mind. With new reforms rolling out under the Leasehold and Freehold Reform Act 2024 (LFRA 2024), it's more important than ever to understand how the changing legal landscape can work in your favour. We set out below a pragmatic guide to navigating the lease extension process, highlighting what to expect, how to prepare and where the recent legal changes might work in your favour.

1. The Length of Your Current Lease
One of the most crucial factors is how many years are left on your lease. Once your lease drops below 80 years, the cost of extending it rises sharply because of “marriage value” (the extra value created by the extension that must be shared with the freeholder). Acting early can save you thousands!

Even though marriage value is being scrapped, it still makes sense to act early, especially while the new rules are being phased in.

2. Your Legal Right to Extend
Most leaseholders have a legal right to extend under the Leasehold Reform, Housing and Urban Development Act 1993. It adds 90 years to your lease and cuts ground rent to zero.

As of 31 January 2025, the old “two-year rule” has been abolished. That means that you no longer need to wait two years after purchasing a lease to begin a statutory lease extension or purchasing the freehold. This is great news if you're eager to act fast!

Once the changes in the LFRA 2024 have been implemented, statutory lease extensions will be increased to a new standard term of 990 years. This aims to provide much greater long-term security and value.

3. Informal vs. Statutory Extension
You can extend informally by negotiating directly with the freeholder, or formally using the statutory process. Informal deals may seem quicker and easier, but they often come with less favourable terms like rising ground rent. The statutory route offers more protection, but it’s more structured and can take longer.

4. The Cost of Extending
The premium (price) you pay for a lease extension depends on factors such as the property’s value, the ground rent, and the years remaining. A specialist surveyor can help calculate this and negotiate on your behalf. Don’t forget legal, surveyor and possible tribunal costs.

5. Impact on Property Value
Extending your lease typically increases your property’s market value and makes it more attractive to buyers. Mortgage lenders also tend to be reluctant to lend on leases with fewer than 70 - 80 years remaining. A longer lease gives you more flexibility when it comes to selling or remortgaging.

6. Ground Rent
Statutory lease extensions reduce your ground rent to a “peppercorn” (effectively zero). If you negotiate informally, be cautious of ground rent terms, some freeholders actually try to retain or even increase ground rent, which can harm your property’s value in the future.

7. Professional Advice
A lease extension is a specialist area of law. You’ll need a solicitor experienced in leasehold enfranchisement and a qualified surveyor to value the premium. Our expertise in this sector can help you avoid costly mistakes and achieve the best outcome.

8. Timing
If your lease is approaching the 80-year threshold, time is of the essence. However, lease extensions can take months (sometimes over a year) to complete. Planning ahead ensures you don’t get caught out by delays.

9. Freeholder Negotiations
Some freeholders are more cooperative than others. You might face difficult negotiations, high premium demands or even long delays. If you can’t agree, the matter can be referred to the First-tier Tribunal (Property Chamber) for determination.

10. Future Security
Extending your lease isn’t just about saving money, it’s about long-term security. A longer lease means stability, freedom from escalating ground rents, and a property that’s easier to sell, mortgage, or pass down to family in the future.

In Summary
Extending your lease can feel daunting, but with the right advice and preparation, it’s a worthwhile investment. If your lease is starting to shorten, acting sooner rather than later can save you money, safeguard your property’s value, and give you peace of mind.

Recent reforms under LFRA 2024 are reshaping the leasehold landscape, making lease extensions more accessible, fairer, and financially viable. But we’re still in a period of transition, understanding your option now can make all the difference later. Talk to us about how we can assist you with your lease extension.

Please contact Daniela Litsova on 0208 949 9500 or by email on dlitsova@pearsonhards.co.uk for a free no obligation chat.