If you own a leasehold property, you don’t own it forever. Unlike freehold properties, a leasehold home is owned for a fixed number of years. As the lease gets shorter, it can become harder to sell or remortgage your property, and the value may fall.
This is where a lease extension becomes important. In this guide, we’ll explain what a lease extension is, how it works, your legal rights, and why acting early can save you thousands of pounds.
Understanding Leasehold vs Freehold
Before diving into lease extensions, it’s worth quickly explaining the difference between leasehold and freehold:
- Freehold: You own both the property and the land it stands on.
- Leasehold: You own the property for a set period, but not the land. The land is owned by a landlord (or ‘freeholder’), and your lease spells out how long you can live there.
Most flats in England and Wales are leasehold. Some houses are too, although this is less common.
What Is a Lease Extension?
A lease extension is when you agree to add more years onto your existing lease. This helps maintain or increase the value of your home and makes it easier to sell or remortgage.
You can extend your lease by:
- Negotiating informally with your freeholder
- Following the formal legal process under the Leasehold Reform, Housing and Urban Development Act 1993
The formal route gives you certain rights and protections under the law, whereas informal agreements may offer flexibility but less certainty.
Why Is Extending Your Lease Important?
As the number of years left on your lease drops, problems can arise:
Properties with Short Leases Are Harder to Sell
Buyers and lenders tend to avoid homes with less than 80 years on the lease. Mortgages can be refused, or terms may be less favourable.
The Cost of Extension Rises as Time Passes
Once your lease drops below 80 years, you’ll have to pay something called “marriage value” — a legal term that means the freeholder is entitled to a share of the property’s increase in value once the lease is extended. This can make the process significantly more expensive.
Peace of Mind for the Future
Extending early ensures your home remains a valuable, marketable asset. It also gives you long-term security and control.
Who Has the Right to Extend a Lease?
Under the law in England and Wales, you have the right to extend your lease if:
- You’ve owned the property for at least two years
- The original lease was for more than 21 years
This is known as a statutory lease extension.
If eligible, you’re entitled to add 90 years to your current lease at a peppercorn rent (which usually means no ground rent).
What’s the Process?
Step 1: Check Eligibility and Lease Length
Make sure you qualify and that your lease is approaching 80 years or less.
Step 2: Get a Lease Extension Valuation
This is done by a surveyor who specialises in leasehold valuation. They’ll estimate how much your premium (the cost to extend) is likely to be.
Step 3: Serve a Section 42 Notice
This legal notice is served on the freeholder, setting out your intention to extend your lease and what you’re offering to pay.
Step 4: Freeholder Responds
They must reply within two months. From there, negotiations begin.
Step 5: Agree Terms or Refer to Tribunal
If you can’t agree, the matter can be referred to the First-tier Tribunal (Property Chamber) to decide a fair premium.
Informal vs Formal Lease Extensions
You can also approach your freeholder to negotiate a private agreement without going through the formal process.
Informal agreements may allow for flexible terms or quicker resolutions — but they can include ground rent increases or other unfavourable terms. They also don’t give you the same legal protections.
Always get legal advice before agreeing to anything.
How Much Does It Cost?
The cost varies depending on:
- The length of the lease remaining
- Property value
- Ground rent amount
- Whether marriage value applies
You’ll also need to budget for:
- Valuation fees
- Your own legal costs
- The freeholder’s reasonable legal and valuation fees (these must be paid by you)
How Dudden Law Can Help
Extending your lease is a legal process with financial consequences. It’s easy to make mistakes or miss key deadlines. At Dudden Law, we’ve supported leaseholders across England and Wales with tailored advice and reliable guidance.
Whether you’re preparing to serve notice or exploring your options, our property law team is here to help you every step of the way.
Need help with a lease extension? Get in touch today and speak to our experts.
Written by
Aimmee Gregory
Head of Conveyancing
