Lease Extension

The Leasehold Reform, Housing and Urban Development Act 1993 (‘the 1993 Act’) (as amended) provides flat owners with the right to extend a long residential lease by 90 years on top of its unexpired term at a peppercorn (meaning nil) ground rent, subject to certain qualification rules.

Initially the right was subject to a qualifying period of ownership or residence. Now, a flat owner only needs to have owned the flat for two years to qualify for this right. The price for the lease extension (the premium) is determined in accordance with the valuation provisions contained in the 1993 Act.

Although this guide is aimed towards tenants we are equally familiar with acting for landlords in respect of their tenants request for a new lease.

Reasons For Extending Your Lease

As the number of years left on a lease decreases so does its value. A short lease may be difficult to sell and it may be difficult to raise a mortgage on the flat. Extending the lease of your flat will make the property more marketable. It is also possible to transfer the right to extend your lease to a buyer, meaning that the buyer will not have to wait the two years to extend it. If you are considering selling or buying a flat with the benefit of a lease extension it is imperative the solicitor is familiar with handling this type of transaction.

80 years is an important number to remember. Once your lease falls below 80 years, the premium payable to your landlord for the lease extension becomes significantly higher as something called ‘marriage value’ is additionally payable to your landlord.

Whether you are considering selling your flat or simply maintaining the value of your investment then as a general rule you will probably wish to consider extending the term of your lease if it has less than 90 years remaining.

Qualifying Criteria

Your lease must have been granted for an original term of more than 21 years and you must have been the registered proprietor of the lease for at least two years. In most cases you will have become the registered proprietor of your lease a couple of weeks after you completed on the purchase of your flat.

How Much Will It Cost?

The premium for the new lease is determined by a complex formulae set out in the 1993 Act. Essentially the amount you pay will be made up of the following:-

  • Loss to the landlord of its ground rent income.
  • Loss to the landlord of its reversion, i.e. its entitlement to the flat at the end of the existing lease.
  • 50% of the marriage value.  The marriage value is essentially the increase in the value of the flat arising from the leasehold and freehold interests being combined.  There is no marriage value payable on flats that have more than 80 years unexpired on the lease.

You will need to instruct a specialist valuation surveyor. We work closely with a number of reputable London valuers and would be happy to assist and guide you with your choice of valuer. 


In addition to the premium for a new lease you will be responsible for your own legal and valuation fees together with the reasonable costs of your landlord (and any intermediary or headlessee). As this is a highly technical area of the law any professional fees are unlikely to be inexpensive. We will always aim to provide you with a fixed fee which will be based upon the complexity of the transaction, how long it will take and whether or not the matter will need to be referred to the County Court or the Leasehold Valuation Tribunal. We consider that we provide excellent value for money.

If you are a flat owner and are considering extending your lease along with your fellow leaseholders and can provide us with a group instruction we can offer discounts on our fees providing there are sufficient economies of scale to enable us to do so.

The Procedure

The claim is initiated by serving an initial notice on your landlord, specifying the premium you are willing to pay for the new lease. The landlord has two months in which to respond by way of legal counter notice which will set out the premium it requires and the new lease terms. The parties then have up to six months in which to negotiate the premium payable. If negotiations are unsuccessful then either party may make an application to the Leasehold Valuation Tribunal (LVT) within two to six month following service of the counter notice. If an application is not made to the LVT during this period and the terms of the new lease are not agreed then deemed withdrawal takes place.

It should of course be mentioned that if your landlord is willing to extend your lease on a voluntary basis and you are able to agree a premium with your landlord outside the 1993 Act then we will be able to avoid the service and receipt of notices and proceed straight to the drafting of the new lease.