In this detailed guide, we will explain all the important aspects part of a statutory / formal lease extension process with links to several specific topics you may wish to find out more about.
This is a detailed lease extension guide and will tell you all you need to know about how to extend a lease including:
- Is a statutory lease extension is right for me?
- Am I eligible for a lease extension?
- Should I go through the process of extending my lease?
- The lease extension process, including:
- Preparing for the process
- Completing the lease extension valuation
- Serving the Section 42 Notice
- Negotiating the price
- Handing the legal work
- Registering the lease extension at the Land Registry
- What's the cost of going through the lease extension process?
- How long does the lease extension process take?
- Homehold’s approach to the lease extension process
Is a statutory lease extension is right for me?
A Statutory Lease Extension involves claiming your legal right to a lease extension and there is a process set out in the law to achieve this.
There are five main reasons of why going through the formal lease extensions process is the best way to extend your lease:
Reason 1: Your lease will be extended by 90 years – so if you have an 85-year lease, you will have 175 years at the end of the process.
Anything above a 150-year lease means your flat has a very long lease. Whether you sell the flat, or even keep it for your life-time, it will always have a long lease.
Read more about the ideal length of a residential lease.
Reason 2: Your ground rent will be reduced to £0 / peppercorn.
If your ground rent increases at frequent intervals or by significant sums, it can cause you an issue when you come to sell your flat. Removing your ground rent will reduce your own annual costs and make it easier to sell the flat.
Reason 3: Your freeholder can’t add any charges or restrictions to your lease during the lease extension process.
The terms of your lease will largely remain the same as your current lease. This means your freeholder can’t suddenly decide to take away access to your parking space or garden, for example.
Under the legislation, there are limited changes your freeholder can make. However, this doesn’t stop them trying to slip other changes in – so this is another reason on why you need to hire a specialist to negotiate these changes on your behalf. We’ve produced a list of changes allowed during a lease extension.
Reason 4: You will get a fair price.
While your freeholder can initially ask for as much as they like for your lease extension, ultimately, they do have to agree a fair price based on the methodology set out in the legislation. If they don’t, then you can take them to tribunal – while this is rarely needed, the threat of tribunal is what keeps them honest.
Reason 5: Your freeholder must complete your lease extension within a certain time frame.
While the timelines are generous, they can’t drag the process on for ever.
The alternative to a formal or statutory lease extension is what is known as an informal or voluntary lease extension.
We don’t recommend informal lease extensions, because we can’t guarantee that we’ll achieve any of the five benefits we outline above. We’ve written a detailed article about the difference between Informal v Formal Lease extensions.
Am I eligible for a lease extension?
To qualify for a formal lease extension, there are certain requirements to meet:
You must own 100% of your property. If you have a shared ownership flat, you will need to ‘staircase’ your share to 100%. For example, if you only own 25%, you must buy out the remaining 75% prior to the lease extension.
It used to be the case that you must also have owned your flat for a minimum of two years before you can extend your lease - but this requirement was abolished in January 2025.
Decided to go ahead with your lease extension?
Should I go through the process of extending my lease?
Generally, we encourage people to extend their lease if they fall into one of the groups below:
If you have a lease below 80 years – this is because your flat will lose significant value after dropping below the 80-year mark threshold and every year that passes. Read more about the 80-year threshold.
The caveat to this rule is that leasehold reform could make it cheaper for people in your position to extend in the future, so you may want to consider waiting for that – although it is likely to be 2026 at the earliest.
If you have a lease between 80 and 100 years – this is the prime time to extend your lease because it’s at the point at which you’ll receive a benefit by extending your lease, but before it gets really expensive.
Generally, buyers will offer less for a flat with fewer than 100 years remaining, as they’ll be anticipating the cost of going through the lease extension process during the time they own the flat.
When your lease drops below the 80-year mark, you are required to pay an additional charge to your freeholder known as "Marriage Value" and this commonly increases the overall cost to between twice and three times as much as if you extended before this point.
If you no longer wish to pay for ground rent – or if your ground rent would prevent you from remortgaging or selling your flat.
Generally, lenders don’t like ground rents that are above £250 (if outside of London), above 0.1% the property value, or those that rise at certain intervals over time
What’s the lease extension process?
Gathering information for the Lease extension
To start off the lease extension process, we need to do an in-depth search into your flat and development.
This is done by our subsidiary firm of solicitors, LLS, who will request all the documents from the Land Registry and apply for searches.
There are many documents relating to your flat and development and the legal team will check through to try and find out as much information as they can as it could have implications on how expensive your premium will be to extend your lease by 90 years. However, the main checks will be an in-depth analysis of your lease, title plan, freehold register etc.
They will find out if there are any nasty surprises early on – so we can avoid these during the lease extension process.
Lease Extension Valuation
Once the legal team has got all the information, they will pass this over to our valuation team who will do an in-depth valuation report which serves two main purposes –
To give you an idea of how much the premium will cost
The report will set out ‘Low’ and ‘High’ figures. The low figure is typically what we will be targeting, and the high figure is the maximum we feel your freeholder could reasonably argue for based on the evidence available (this could be considered as your reasonable ‘worst case scenario’).
We usually work out the premium based on three main things.
The value of your flat, the current lease years remaining and how much ground rent you pay. You can read more about how a lease extension is calculated.
A chance to gather as much evidence as we can
This is what we’ll use to argue with your freeholder when we get to negotiations.
We’ll start off by looking at your development and find similar properties that have sold within your development in the last two years. This is regarded as the strongest form of evidence.
When development comparables are limited, we will look at wider market evidence, i.e., flats that sold within a mile of your development.
Serving the S42 Notice to the freeholder and receiving the Section 45 Notice
Once you are happy with the valuation report, the legal team at LLS will look to serve the Section 42 Notice to your freeholder to officially start the lease extension process.
This document lets your freeholder know you are using your statutory right to extend your lease by 90 years and remove your ground rent.
Initial offers must be reasonable, but it is generally accepted that some room will be left for negotiation. If your valuation range is between £9,000 to £10,000, then we might serve notice at £7,000 or £8,000
Once we have served notice to your freeholder, they have two months and some postage time to respond back with a counter notice, which is known as the Section 45 Notice.
In most instances, your freeholder will take the full time to respond and come back with a higher price. Once they have responded, we'll start our negotiation work.
Negotiating the premium for your lease extension
We want you to leave the lease extension process feeling like you got a fair price.
We never want you to have to choose between accepting a lease extension premium you feel is too high, or paying us to negotiate not knowing if you’ll be better off.
As a result, all our negotiation work is covered within our fixed fee and unlike other firms, we don’t charge by the hour. Regardless of whether the negotiations take one week or six months, we’ll continue negotiating until you are happy with the price.
We usually start off by trading calculations with the freeholder’s valuer to get an idea of how your freeholder reached their price.
There are several differences in the evidence we can use to ask for a concession for your premium for example, the condition, location and size.
Most freeholders are slow to respond so you can assume negotiations, at times, can be a lengthy process. However, it’s our job to chase them and we’ll do so proactively.
During the negotiation phase, we will send you a weekly email to let you know exactly where we are. When we have substantial news we will send you some advice and options for negotiation for a lower premium.
What's the cost of going through the lease extension process?
There are three main things to consider when paying for a lease extension:
- Premium – this is the price to buy the extra years and remove the ground rent, and this is what we are negotiating on. It is based on a few different things: the value of your property, the length of your lease and how much ground rent you pay.
- Freeholders Costs – the law requires you to pay the freeholder’s legal and valuation cost. On average these are around £2,500 to £3,000 (however this is dependent on your freeholder)
- Homehold Costs – We offer an all-in-one service which includes all the valuation, negotiation, legal work and disbursements and our fee is £2,580+VAT.
The timeline for payments is spreads over the course of the process. Homehold’s fees are split into three equal instalments, which are paid as you go through the process.
You will then pay the freeholder’s costs and the premium right at the end of the process.
If you need to finance your lease extension, you can read more about remortgaging to pay for your lease extension process.
You can use our online calculator to get an idea for your premium.
How long does the lease extension process take?
The lease extension process can take six or seven months if it’s a quick process and around 12 months if it is a slow one.
However, on average, it takes around nine months to complete the lease extension process.
There are deadlines, under the legislation, that we and your freeholder must adhere to.
For example, when we serve notice to your freeholder, they have two months to get back to us and we have six months from receiving the counter notice to negotiate the premium and the terms of the lease.
You can find more information about lease extension deadlines.
Who can help me with the formal Lease Extension process?
Homehold offer an all-in-one service to take you through the lease extension process.
We have our own dedicated valuation team and own our own law firm, LLS, in order to conduct the lease extension under one roof. We do this for a fixed fee.
We will do all the necessary valuation, negotiation and legal work to get this over the line – and this includes things like Land Registry charges and postage that some firms add as disbursements!
You can book a free phone consultation to discuss with one of our experts who can help with different queries – no matter how complicated your case is.
