Extend your lease

Protect or enhance your property value


What is a Leasehold interest?

A leasehold interest is the right to own a property subject to lease terms for a fixed period of time.  Often long leasehold interests are for 99 or 125 years. For example, many properties built in the 1970s, may have already lost about 40-50 years of their leasehold value.

Is it worth extending my lease?

A lease is a diminishing asset. This means that fluctuations in the market and condition aside, the value of the property falls year upon year. At the end of the long leasehold interest, the leaseholder is normally required to give up possession to the freeholder, with no compensation payable.

So is it still worthwhile extending?

Potentially yes! By extending, you could be improving the value of your property, in most cases by more than the cost of doing so. You may even be changing the property from one which is not suitable for a mortgage to one that is, purely by extending the lease. This can have a significant affect on the Market Value.

When is it the best time to extend the lease?

When a lease reaches around 83-85 years unexpired, the increase in value of extending it normally outweighs the costs of doing so. It can be a worthwhile investment to extend. Above that level, the cost benefit analysis may not make it worthwhile extending but some people choose to in order to future proof their investment.

80 Years is the magic number!

When a lease falls under 80 years, the law that helps determine the costs of extending changes. The value of the existing lease can fall significantly the moment it reaches under 80 years. The amount a freeholder can demand for a lease extension can increase further.  The price to extend can sometimes be far more at 79 years and 364 days than it is at 80 years and 1 day.

If leases reach around 70 years or less, many mortgage lenders may be reluctant to lend on them. Restricting potential purchasers to cash buyers only can significantly reduce the Market Value.

The longer you leave it before extending your lease, the more worthwhile it is extending but the more it will cost!

Am I entitled to extend?

If you have owned the leasehold property for at least two years, the Leasehold Reform Act 1993 gives you a right to extend, even if the freeholder does not want you to. If you are buying the property from someone who has owned it for at least two years, you may wish to ask them to start the process of extending. The right to extend can then be assigned to you, even if you have only just bought the property.  Otherwise you will have to wait for two years whilst the Value might be falling.

What about my annoying ground rent?

Nearly all leases will contain a provision for payment of ground rent. The terms of the lease will determine the ground rent, when it is payable and whether there are any changes in ground rent.

We have come across numerous leaseholders whose ground rent has increased hugely over time. The law allows that when extending a lease on a flat for 90 years (the standard), the ground rent can turn into a peppercorn which is a legal term, effectively meaning that the amount you pay each year reduces to nothing.

Informal Lease Extensions

Carrying out an informal (voluntary) lease extension does not have to extend by 90 years or reduce the ground rent to effectively nothing. The parties may choose to agree something completely different. This could result in the ground rent staying the same or even increasing over time. The informal route does not include the serving of a Section 42 Notice (Leasehold Reform, Housing and Urban Development Act 1993) or equivalent, so you cannot ultimately force the Freeholder to come to terms and negotiate over a disputed valuation.


Advantages to an informal extension


  • You can get a lease for any length of term.
  • Saves you paying for a section 42 notice.
  • Makes it more affordable if you can’t afford 90 years but can afford a lower number of years.


Disadvantages to an informal extension


  • No guarantee the process will complete.
  • The process doesn’t follow the strict time line set in the Leasehold Reform Act, meaning either side can delay matters
  • The valuation isn’t calculated using the formula in the Act – the Freeholder can charge anything they like.
  • You may still have to pay ground rent.

Formal Lease Extension

The formal lease extension route, which is recommended, is enshrined in law (The Leasehold Reform Act 1993 as amended). It involves a qualified Chartered Surveyor (who is also RICS registered valuer) to provide you with a lease extension valuation, then using this figure as a basis for instructing a solicitor to serve your landlord/freeholder with a Section 42 Tenant's Notice to inform them of your intentions to extend the lease.

Your freeholder, if available, must respond and they can either agree, with or without conditions, or disagree. Should they disagree, you (or they) have the option to take the matter to a Leasehold Valuation Tribunal which makes a final decision binding on both parties. Should you or they choose to take the tribunal option, this has to be done between 2 and 6 months of the date of service of the freeholders  Section 45 Counter-Notice.


  • You get a lease with an additional 90 years on top of the current lease term
  • The ground rent goes to peppercorn (effectively zero)
  • The process must follow a prescribed route with deadlines set for completion
  • The premium is calculated the formula contained within the Act. Where there is less than 80 years remaining, the scope for negotiating is greater.


  • You must extend for 90 years and be able to pay the premium.

At Websters our Chartered Surveyors (who are also RICS registered valuers) have the necessary knowledge and expertise to carry out surveys across London and the South East.

We endeavour to provide valuation advice in compliance with the RICS Valuation – Global Standards, also referred to as the RICS ‘Red Book’. This document sets out the gold standard for undertaking valuations through a quality assured process, so you can have confidence that consistency, objectivity, transparency and a high standard of service is maintained.

Feel free to get in touch to chat through your options

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